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[h=3]Jul 31, 2011[/h][h=1]Easy loans hard to pay off[/h][h=1]Growth of moneylenders raises concern that low-income earners are being lured into spiralling debts[/h]<!-- by line -->By Mark Tay
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<!--background story, collapse if none-->'Most moneylenders follow the rules'
Moneylenders said they will be more careful when giving out loans, following the first case of a licensed moneylender charged last Monday for allegedly breaking the law.
George Phua, founder of Capital Alliance Credit, had allegedly loaned money without proper documentation, lent excessively to low-income earners and failed to inform borrowers in writing about the terms of their loans.
He faces about 90 charges but the prosecution will proceed with only 30 of them while taking the remaining into consideration, The Straits Times reported on Tuesday.
Owner of EZ Enterprise Moneylender Ong Swee Heng said that he will 'definitely be more careful now'.
While he said he is aware there may be others in the industry who are flouting the rules, he explained that he is not worried.
'I'm not like others who are doing 'funny things'. We just follow the rules and regulations,' he said.
According to Mr Ong, the Insolvency and Public Trustee's Office conducts spot checks on moneylenders 'every now and then', making it hard for them to break the law.
'Every quarter, we will submit the details to the Registry Of Moneylenders (ROM),' he said, adding that the registry would scrutinise all the documents.
Mr David Poh, president of the Moneylender's Association of Singapore, told The Sunday Times that most licensed moneylenders tend to follow the rules laid out by the authorities.
'If a moneylender lies to ROM and cooks up the reports that are submitted to it, it will be only a matter of time before he is caught.
'Moneylenders have got a lot to lose if they do not follow the Act. That may be the reason why among so many licensed moneylenders, only one has been hauled up for action by the ROM to date,' he said.
Following the case, Mr Poh advises licensed moneylenders to 'hand out loans with proper documentation - with all details very clearly specified', and to promptly submit reports with accurate information to the ROM.
Advising borrowers, he said: 'Do not borrow from one moneylender to pay another. It will never solve your problem - it only adds on to it.'
<!--end background story--><!--background story, collapse if none-->PROCESS IS QUICK AND DISCREET
-- ST PHOTO: NURIA LING
The Sunday Times visited a total of 10 different moneylenders located in Ang Mo Kio, Jalan Besar and Guillemard Road, and found that the environment they operated in often facilitated easy credit borrowing.
The offices, simply furnished, were often located in the heartland.
All a borrower has to do to take a loan is to walk in, fill up a form and hand it over at a counter, typically manned by a pretty, young woman waiting to process the loan application.
Documents that moneylenders require are proof of income - either through a pay slip or a company employment letter - and the applicant's identity card.
A customer's SingPass user ID and password are usually also required, even though the Registry of Moneylenders now prohibits this.
After submitting the documents, the borrower is invited to have a seat at the waiting area while the staff checks his records. Water dispensers and comfortable seats help calm frazzled nerves.
To reassure borrowers that the lenders they are approaching are legitimate, the company's moneylender licence is always prominently displayed.
To keep borrowing discreet, most shopfronts of the moneylenders are lined with frosted stick-on wallpaper, with only a little slit - slightly above waist level - for staff to monitor the situation outside the office.
<!--end background story-->
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[h=4]Since moneylending laws were relaxed in 2008, many more licensed money lenders have sprouted up. -- ST PHOTO: BRYAN VAN DER BEEK[/h]<!-- story content : start -->
LOW-INCOME earners are increasingly turning to the growing pool of licensed moneylenders as their pay do not qualify them for a bank loan.
Despite the high interest rate and upfront fees, these borrowers say they have no other choice.
Read the full report in this week's edition of The Sunday Times.
<!-- end by line -->
<!--background story, collapse if none-->'Most moneylenders follow the rules'
Moneylenders said they will be more careful when giving out loans, following the first case of a licensed moneylender charged last Monday for allegedly breaking the law.
George Phua, founder of Capital Alliance Credit, had allegedly loaned money without proper documentation, lent excessively to low-income earners and failed to inform borrowers in writing about the terms of their loans.
He faces about 90 charges but the prosecution will proceed with only 30 of them while taking the remaining into consideration, The Straits Times reported on Tuesday.
Owner of EZ Enterprise Moneylender Ong Swee Heng said that he will 'definitely be more careful now'.
While he said he is aware there may be others in the industry who are flouting the rules, he explained that he is not worried.
'I'm not like others who are doing 'funny things'. We just follow the rules and regulations,' he said.
According to Mr Ong, the Insolvency and Public Trustee's Office conducts spot checks on moneylenders 'every now and then', making it hard for them to break the law.
'Every quarter, we will submit the details to the Registry Of Moneylenders (ROM),' he said, adding that the registry would scrutinise all the documents.
Mr David Poh, president of the Moneylender's Association of Singapore, told The Sunday Times that most licensed moneylenders tend to follow the rules laid out by the authorities.
'If a moneylender lies to ROM and cooks up the reports that are submitted to it, it will be only a matter of time before he is caught.
'Moneylenders have got a lot to lose if they do not follow the Act. That may be the reason why among so many licensed moneylenders, only one has been hauled up for action by the ROM to date,' he said.
Following the case, Mr Poh advises licensed moneylenders to 'hand out loans with proper documentation - with all details very clearly specified', and to promptly submit reports with accurate information to the ROM.
Advising borrowers, he said: 'Do not borrow from one moneylender to pay another. It will never solve your problem - it only adds on to it.'
<!--end background story--><!--background story, collapse if none-->PROCESS IS QUICK AND DISCREET
-- ST PHOTO: NURIA LING
The Sunday Times visited a total of 10 different moneylenders located in Ang Mo Kio, Jalan Besar and Guillemard Road, and found that the environment they operated in often facilitated easy credit borrowing.
The offices, simply furnished, were often located in the heartland.
All a borrower has to do to take a loan is to walk in, fill up a form and hand it over at a counter, typically manned by a pretty, young woman waiting to process the loan application.
Documents that moneylenders require are proof of income - either through a pay slip or a company employment letter - and the applicant's identity card.
A customer's SingPass user ID and password are usually also required, even though the Registry of Moneylenders now prohibits this.
After submitting the documents, the borrower is invited to have a seat at the waiting area while the staff checks his records. Water dispensers and comfortable seats help calm frazzled nerves.
To reassure borrowers that the lenders they are approaching are legitimate, the company's moneylender licence is always prominently displayed.
To keep borrowing discreet, most shopfronts of the moneylenders are lined with frosted stick-on wallpaper, with only a little slit - slightly above waist level - for staff to monitor the situation outside the office.
<!--end background story-->
<!-- end left side bar -->
LOW-INCOME earners are increasingly turning to the growing pool of licensed moneylenders as their pay do not qualify them for a bank loan.
Despite the high interest rate and upfront fees, these borrowers say they have no other choice.
Read the full report in this week's edition of The Sunday Times.
