Singapore-You may need a police license to operate a debt collection agency in Singapore. This is one of several rules under the new law proposed to regulate their activities.
The debt collector must also first confirm that the debt collector is the debtor, based on the proposed rule issued by the Ministry of Interior (MHA) on Wednesday night (June 15th).
Moreover, they are not allowed to take any action that poses a physical threat. This includes speech, writing, signs, or visible expressions, MHA states.
The ministry’s recommendations aim to address the issue of numerous police reports to debt collection agencies and their staff for causing alertness and obstruction to the general public.
There were 134 reports in 2015, an increase to 590 in 2018, but a decrease to 272 last year.
MHA said it is seeking feedback from the general public about the proposal.
He also acknowledged that debt collection is a legitimate activity that facilitates the fulfillment of financial obligations.
“But given growing concerns, it may be necessary to initiate upstream regulatory interventions in the industry to better manage the disadvantages of such activities,” he said.
First, he proposed a license system in which those who wish to run a debt collection business must first apply for a license from the police. Anyone who wants to work for such a company must apply for approval in collaboration with the company.
MHA said this screening process is similar to the application process for many other regulatory systems.
A licensed debt collection company must comply with rules such as keeping good records such as contracts with creditors. This helps facilitate police investigations in the event of a complaint.
The MHA also proposed imposing a lower regulatory burden on companies performing such activities to recover the amount they should pay, even though the main commercial benefit is not debt collection.
These companies include licensed money lenders, banks and financial companies. Police approval is not required, but debt collection rules must be observed.
“This (class license framework) opposes most of the reports submitted for debt collection harassment against debt collection companies that collect debt on behalf of others, not the company that collects their debt. It is based on police observations that it is, “said MHA.
Police can impose regulatory sanctions on violations, such as revoking a company’s class license. This prevents the company from recovering its debt.