Debt Collection Bill

Order for Second Reading read.

3.00 pm

The Minister of State for Home Affairs (Ms Sun Xueling) (for the Minister for Home Affairs): Mr Speaker, Sir, on behalf of the Minister for Home Affairs, I beg to move, "That the Bill be now read a Second time."

The number of Police reports made against the conduct of debt collection businesses and debt collectors has remained high. From 2018 to 2021, an average of 367 reports were lodged each year. The reports were mainly against debt collection tactics aimed at pressuring debtors into payment by causing public embarrassment and inconvenience to them.

Such tactics have attracted significant public attention and affected the public's sense of safety and security. Let me share two examples.

In 2019, a debt collector made multiple visits to a debtor's home and workplace within a month to collect a debt. On three occasions, he wore a traditional Chinese funeral outfit to the debtor's workplace, while carrying accessories, including a banner with the debtor's face, a funeral lantern and incense paper, and engaged in actions, such as shouting loudly, chanting, kneeling and blowing a whistle. He refused to leave even when told that the debtor was not present. On one such occasion, he even shouted at the debtor's colleague.

Some Members might also recall that back in 2015, six debt collectors visited a debtor at a food stall in Funan Mall to collect a debt. They unfurled a large banner stating that debt recovery was in process and proceeded to disrupt the stall's business, including harassing the staff and damaging the stall's equipment.

Such debt collection conduct is unacceptable and causes unnecessary alarm to members of the public. The debt collectors in both cases were successfully taken to task under existing legislation, such as the Protection from Harassment Act and the Penal Code. However, we need to ask ourselves, can we do more to prevent such problematic debt collection conduct from occurring in the first place?

Debt collection is a legitimate economic activity that facilitates the fulfilment of financial obligations. However, individuals and businesses should not be subjected to debt collection methods that clearly exceed what may be considered reasonable pressure for payment, especially if these methods also affect the public's sense of safety and security.

There is thus a case to institute a regime to regulate the debt collection industry and to address problematic debt collection conduct.

Such an approach is not new. In countries like the United States and Australia, legislative levers have been put in place to regulate the conduct of debt collectors and take action against problematic conduct.

We seek to achieve two objectives through the introduction of the Debt Collection Bill.

One, to regulate the debt collection industry and prevent problematic debt collection conduct by setting standards of entry into the industry and imposing appropriate licensing requirements on debt collection businesses and debt collectors; and two, to reduce problematic debt collection conduct by putting in place appropriate levers to take errant debt collection businesses and debt collectors to task.

Today, businesses that carry out debt collection activities are not regulated. There is no legal definition for what constitutes a "debt collector", nor is there an enforceable legislative framework.

Without a regulatory framework, it is challenging to definitively assess the number of debt collection companies and debt collectors in Singapore. This is partly due to the variety of corporate structures that debt collectors can use for their operations. For example, some debt collectors exclusively collect debt on behalf of others, whereas others operate in-house as part of a parent business, such as debt collectors employed by licensed moneylenders, banks and financial institutions.

There is a wide spectrum of companies operating within Singapore's debt collection industry. At one end, there are debt collection companies which have consistently maintained high professional standards and pristine reputations. Some such companies service institutional clients, such as banks, which, in turn, hold them to similarly stringent and auditable requirements. At the other end of the spectrum, however, there are debt collection companies that operate within less-established corporate structures and are willing to adopt a wider range of debt collection practices. These companies mainly serve small-scale enterprises or individuals. Most of the companies that are featured in Police reports hail from this end of the spectrum, in part, due to their more aggressive debt collection practices and tendency to skirt around the boundaries of the law.

To improve oversight of the debt collection industry, the Bill will regulate: one, debt collection businesses, which collect debt from a debtor either on behalf of another person or where the businesses themselves had acquired the debt and their debt collectors; and two, entities carrying on a business which is primarily in the lending of money and collecting of money owed to their own business and which are already regulated by other Government entities today, such as banks and licensed moneylenders. For this reading, I will refer to them subsequently as "already-regulated businesses".

In order to reduce regulatory burden and costs for businesses, the licensing requirements for each type of entity will be calibrated based on the law and order risk posed by its debt collection activities.

In assessing the law and order risk, we considered indicators, such as the number of harassment reports made against such businesses over the years.

Clauses 6(1) and 7 to 13 set out a licensing regime for debt collection businesses which collect debt from a debtor either on behalf of another person; or where the businesses themselves had acquired the debt, for example, factoring companies that provide cash or financing to other companies in exchange for the debts owed to the companies. Clauses 17 to 21 set out an approval regime for the deployment of their debt collectors. The business models of such entities lend themselves to higher law and order risk.

Under the licensing regime, a business must apply for and obtain a licence to carry out debt collection activities. An individual who is deployed as a debt collector by a licensed debt collection business must make a joint application with the debt collection business and must obtain an approval to be so deployed, before he or she can carry out any debt collection activity.

There is no restriction on the number of debt collection businesses for which a debt collector can work. A debt collector can be granted multiple approvals to work for various debt collection businesses at any one point in time.

All debt collection businesses, including their key appointment holders and the debt collectors, will be screened by the Police and must be assessed to be fit and proper before they are granted a licence or an approval.

In assessing whether an individual is fit and proper, the Licensing Officer will take into consideration, among other things, prior offences committed by the individual that are relevant in determining the propensity of an individual to engage in problematic debt collection conduct. Generally, these could include offences involving harassment or violence. The severity of the offence and the length of time that has passed since the commission of the offence will also be considered. Applicants who fail to meet the fit and proper criteria will not be allowed to carry on a debt collection business or carry out debt collection activities.

The fit and proper criteria will be set out in subsidiary legislation. The Police will also publish the criteria and requirements on their website.

To deter debt collectors from engaging in problematic debt collection conduct and causing disamenities to members of the public, clauses 10 and 21 allow the Licensing Officer to impose conditions on licensed debt collection businesses and their approved debt collectors. Clause 45 allows the Minister to make regulations to guide the conduct and stipulate the duties and responsibilities of debt collection businesses and their debt collectors.

Regulations that we intend to introduce include: one, requiring debt collectors to verify that the person from whom they are attempting to collect debt is, indeed, the debtor; as well as, two, prohibiting debt collectors from continuing to collect debt from a debtor, if the debtor has informed the debt collection business or collector by any verifiable means that the debt is in dispute or that the debtor has initiated a process to settle the debt through other means, which could include mediation or Court proceedings.

We also intend to introduce regulations stating that a debt collector must not engage in certain conduct when carrying out debt collection activities, such as displaying or engaging in any behaviour that threatens the physical safety of the debtor or any other third parties like the debtor's family members, or affixing notices in relation to the debt on a property that does not belong to the debtor or at any public place.

Let me give three examples of prohibited conduct when carrying out debt collection activities.

First, a debt collector brandishing his fist to the debtor or threatening physical harm to a debtor or his or her family.

Second, sending text or social media messages to the debtor threatening physical harm to the debtor or his or her family.

Third, pasting a notice with the debtor's identity information on the door of the debtor's neighbours.

For such cases, where a contravention of regulations is made out upon investigations, the offender will be liable on conviction to a fine not exceeding $10,000 or imprisonment for a term not exceeding 12 months, or both. For repeat offenders, the punishment will increase to a fine not exceeding $20,000 or imprisonment for a term not exceeding two years, or both.

Regulatory action can also be taken against the offender, including revocation or suspension of licence, or cancellation or suspension of approval under clauses 22, 24, 25 or 27.

Debt collection conduct involving the commission of criminal offences and which do not fall under the regulations will continue to be dealt with under existing legislation, such as the Protection from Harassment Act and the Penal Code.

Next, we will be class licensing already-regulated businesses, such as licensed moneylenders and banks. They are assessed to pose lower law and order risk, compared to debt collection businesses that are not currently regulated.

Clauses 6(2), 14 and 15 set out a class licensing regime for already-regulated businesses whose core business includes lending and collecting money owed to their own business. They will be allowed to carry out debt collection activities if they comply with the class licensing conditions and they do not need to apply for an individual licence. This will minimise regulatory compliance costs.

The list of regulated businesses is set out in Part 2 of the First Schedule.

Under the class licensing regime, an already-regulated business need not apply for or obtain an individual licence to carry out debt collection. An individual who is employed by a class licensed debt collection business to collect debts will not need to be approved by the Licensing Officer. Businesses and individuals under the class licensing regime also need not be subject to screening by the Police to assess if they are fit and proper.

Notwithstanding the above, clause 22 allows the Licensing Officer to take regulatory action against individual class licensees, including disapplying a class licence, if the Licensing Officer finds that the class licensee has contravened any class licensing conditions. This serves as a safeguard against class-licensed businesses that may engage in errant debt collection conduct.

Persons and entities, other than debt collection businesses and already-regulated businesses that collect debts owed to themselves that were not acquired from another party, will not fall within the scope of the Bill. Examples include individuals collecting personal loans owed to them, or retail companies with in-house credit control departments collecting debts owed to the company, and, for the avoidance of doubt, the conduct of such collections will still be governed by other laws.

Entities, whose activities have been assessed to pose minimal law and order risk, will be excluded from the scope of the Bill.

These entities are set out as excluded persons under Part 1 of the First Schedule.

They are: one, individuals who conduct Court-administered debt collection activities, such as the Official Assignee or the Official Receiver; two, law practice entities and insolvency practitioners that are already regulated under the Legal Profession Act 1966 and the Insolvency, Restructuring and Dissolution Act 2018, respectively; and three, entities which acquire a debt or debts through acquiring or merging with a business, other than a debt collection business, in a transaction that includes the transfers of accounts receivable, or through the seizure of accounts receivable under a security agreement.

This list of excluded persons will be reviewed periodically. If it is assessed that there is a need to regulate any of the excluded persons in the future, we will do so.

The Bill also introduces other offences and penalties.

Clause 6 sets out offences for: one, the carrying on of a debt collection business without a valid licence; and two, the conduct of any debt collection activity by an already-regulated business without a valid class licence.

Such offences will attract a fine of up to $20,000 or imprisonment for a term not exceeding two years, or both. For repeat offenders, the punishment is a fine of not less than $20,000 and not more than $100,000 or imprisonment for a term not exceeding five years, or both.

Clause 17 sets out offences for: one, individuals who act as debt collectors for debt collection businesses without approval; and two, individuals who act as debt collectors for entities carrying on already-regulated businesses where the entities are not class licensees or where the individuals are not employed by these entities.

Clause 18 sets out the offence for licensees who deploy individuals to act as debt collectors where such deployment has not been approved. Offenders will be liable on conviction to a fine not exceeding $10,000 or imprisonment for a term not exceeding 12 months, or both. Repeat offenders will be liable on conviction to a fine not exceeding $20,000 or imprisonment for a term not exceeding two years, or both.

The Bill provides powers for the Police to administer the regime. These include: one, powers related to the administering of the licensing and approval regimes; two, powers of entry into premises used for a debt collection business or already-regulated business and other powers following such entry; three, powers of investigations, including powers to require relevant persons to provide information or attend before the Police; and four, powers to appoint non-public officers as compliance officers who will assist with inspections of regulated parties. These powers are similar to those accorded to Police under other regulatory regimes, such as the Massage Establishments Act.

The Bill allows persons, including applicants and licensees, to appeal to the Minister against an appealable decision made by the Licensing Officer. Appealable decisions include the refusal to grant or renew a licence and the refusal to grant an approval for an individual to be deployed as a debt collector.

The Minister's decision on an appeal is final. Unless otherwise directed by the Minister, the decision appealed against must be complied with until the determination of the appeal.

Lastly, the Bill provides saving and transitional provisions to ensure that sufficient time is provided for existing debt collection businesses and debt collectors who wish to continue operating their debt collection business or acting as debt collectors to transit into the new regime.

To conclude, this Bill seeks to introduce a regulatory framework to improve the conduct of the debt collection industry and better address disamenities that may arise from problematic debt collection conduct.

Mr Speaker, Sir, I would now like to conclude in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] Debt collection is a legitimate economic activity that facilitates the fulfilment of financial obligations. However, debt collectors should not resort to extreme debt collection methods to collect debt from individuals or businesses, especially if these methods also affect the public's sense of safety and security.

Hence, to prevent disamenities to members of the public, we will regulate the debt collection industry, set standards for entry into the industry and impose appropriate licensing requirements on debt collection businesses and debt collectors. This is to prevent problematic debt collection conduct.

Meanwhile, we will also put in place appropriate levers to take errant debt collection businesses and debt collectors to task.

In order to reduce the regulatory burden and the costs for businesses, the licensing requirements for each type of debt collection entity will be calibrated based on the law and order risk posed by its debt collection activities.

Specifically, under this Bill, a debt collection business must apply for and obtain a licence to carry out debt collection activities and be responsible for the conduct of its debt collectors. The debt collector must obtain an approval from the Police before they can carry out any debt collection activity.

An already-regulated business that lends and collects money, such as a bank and a licensed or exempted moneylender, need not apply for an individual licence. Its in-house debt collectors will also not be required to apply for approval.

I believe the introduction of this Bill will help to better regulate Singapore's debt collection industry and deter problematic debt collection conduct, while also preserving the public’s sense of safety and security.

(In English): Mr Speaker, Sir, I beg to move.

Question proposed.

Mr Speaker: Mr Yip Hon Weng.

3.20 pm

Mr Yip Hon Weng (Yio Chu Kang): Mr Speaker, Sir, debt collection activity is often a necessary and important part of any credit ecosystem. But debt collection must be performed in a regulated and civil manner.

The number of Police reports made against debt collection harassment has remained high in recent years. Licensing debt collecting companies is a step in the right direction. This is to stamp out problematic debt collection activities. Nevertheless, I wish to seek some clarifications.

Firstly, Mr Speaker, Sir, are there specific offences that are given more weight when taken into consideration in approving the licence of debt collectors?

I understand that a range of offences under the Organised Crime Act, Vandalism Act and Protection from Harassment Act would be given more weight against the approval of licence. Is this an exhaustive list? Would the Licensing Officer also take into consideration the age of the debt collector at the time of the offence, the frequency of the offences and the interval between the last offence and the time of licence application?

Secondly, Mr Speaker, Sir, there must be clearer and accessible guidelines on what constitutes proper and improper debt collection. This is not merely for the benefit of the licensed debt collectors. It also benefits potential victims of improper licensed debt collectors.

There was a very recent case of a resident who started with legitimate intentions to get a $30,000 loan from a purportedly licensed moneylender. However, she ended up losing even more cash in a loan scam. She also got harassed by loan sharks and even got duped into being a money mule. As such, having clear guidelines would help residents not fall prey to dubious debt collectors.

Another area of concern is the coverage of communication channels. Does the Bill cover online correspondences, such as email, social media platforms and instant messaging apps?

These channels have become increasingly common means for debt collectors to badger the debtor, so much so that the US' Consumer Financial Protection Bureau had in 2021 approved a set of rules which dictate how debt collection agencies can email, text or contact debtors on social media to seek repayment of unpaid debts. Among these rules, collectors must allow debtors to opt out of being contacted online. Any messages that they send also have to be private. They are not allowed to post on the debtor's social media pages if it is public or visible to contacts. Are there plans to adopt similar rules here in Singapore?

I also wish to ask how the Bill applies to the guarantors of debtors. I support the move to disallow debt collectors to collect money or attempt to contact persons who are not the direct debtors. However, can the Minister clarify whether this is also extended to guarantors of the debtor? Are guarantors bound by law to repay the debts on behalf of the debtor? Some people may have involuntarily agreed to become guarantors without expecting to be responsible for the loan. This could happen when the guarantor did not have full understanding of the implications or they did it out of friendship or family obligations. Does the Bill deem guarantors to also be debtors? Would the Ministry also consider enhanced penalties for debt collectors who harass family members or other persons?

Clear guidelines have to be followed through with compliance. Clause 16 of the Bill mentions that the Licensing Officer sets out the code of practice. How will this code of practice be determined and how will compliance be enforced? Should debt collectors be required to wear body cameras? Do they also have to produce their licence to the targeted debtor before embarking on their debt collecting activities?

Thirdly, Mr Speaker, Sir, we also want to ensure that the guidelines and regulations are not too restrictive to the point of hampering legitimate debt collection work.

There is some concern that under the new licensing, with a list of guidelines on what debt collectors cannot do, the pendulum may have swung to the other extreme. In order to reduce the ambiguity of what constitutes improper debt collection, would the code of practice to be introduced via clause 16 of the Bill provide a list of best practices and guidelines with relevant explanatory notes on what debt collectors can or cannot do?

In Australia, the relevant government and public agencies worked on a debt collection guideline for collectors and creditors. Its purpose is to assist creditors, collectors and debtors to understand their rights and obligations. It is also to ensure that debt collection activity is consistent with consumer protection laws.

Do we intend to set out similar guidelines? If a debt collector is found to have breached the regulations, what are the avenues for victims to lodge a complaint? Should a specific hotline or body be created to address these complaints? My concern is that the finite resources of the Police may be clogged up by such complaints, which are often less urgent. What action will be taken against the collector? Will they be suspended, pending investigation? How do we avoid situations where a recalcitrant debtor makes frivolous complaints to hamper the debt collector's job and avoid paying their debts? Who will manage and investigate the complaints? Would it be the Police or the Licensing Officer?

Fourthly, Mr Speaker, Sir, how are Licensing Officers selected? The Police and Licensing Officers have a significant role to play in enforcing the regulations of the Bill. Debt collectors are screened by the Police and debt collecting companies are licensed by Licensing Officers. Can the Ministry clarify whether Licensing Officers are recruited from the Police or would they belong to another department under the Ministry?

Finally, Mr Speaker, Sir, I would like to share two points on reducing the need for aggressive debt collecting.

Firstly, we should limit the over incentivising of debt collection companies. I am concerned that some of these companies, especially those that are paid on a commission basis, may resort to hard-handed measures to collect debt, especially if it means that they earn more in return. Will the Ministry consider implementing a cap on the total amount of incentives that a debt collection company can earn from a particular assignment? Are clients of debt collection agencies required to pay a base compensation to these agencies even if the agency fails to achieve the target?

More importantly, we should strive to solve the problem upstream by reducing the incidence of overdue debts. This would require more public education about borrowing money from different types of sources, be they individuals or licensed moneylenders.

Companies in the business of providing loans should always impose credit checks before granting loans. This is to prevent debtors from overleveraging.

Debtors, too, are responsible for learning and practising good financial management. This is to ensure that they can repay their debts in a timely manner. They should also be aware of their legal rights pertaining to overdue payments and debt collection laws.

Are our community legal clinics adequately equipped to help residents who have relevant concerns?

In conclusion, Mr Speaker, Sir, I have spoken to some residents who have shared with me about their experiences with debt collectors. They shared that the way some of these debt collection agencies work is no different from how some loan sharks or "Ah Longs" operate. Some have no qualms about using tactics, such as public intimidation, shaming using vulgarities and, sometimes, even using violence to get the work done.

As we move Singapore forward, we absolutely cannot condone any individual or organisation to harass or harm someone even if it is done with the objective of fulfilling their job responsibilities. Any eventual failure to reclaim debts should be resolved through legal means.

I am confident that the new laws would greatly reduce the number of harassment cases and, in doing so, help build a safer and secure Singapore. I support the Bill.

Mr Speaker: Mr Louis Chua.

3.28 pm

Mr Chua Kheng Wee Louis (Sengkang): Mr Speaker, my speech today will focus primarily on the increasing visibility of debt collection activities in the eyes of the broader public and how this prevalence is now intensifying as such activities are captured and spread on social media by either third parties or the purported debt collectors themselves.

Credit is essential for the functioning of modern economies and the availability of credit can support growth, improve convenience and facilitate transactions on both the business and personal front.

The danger of that is, of course, the resultant implications when debt owed is not repaid when it comes due, whether through one's unwillingness or inability to pay.

In the earlier days of our nation's history, unlicensed moneylending activities and their intimidating and violent means of debt collection are perhaps much more prevalent.

While I confess that I have not witnessed such activities first-hand, I am sure we have all come across stories of physical violence and intimidation by unlicensed debt collectors, known colloquially as "Ah Longs", or seen first-hand the words "Owe Money, Pay Money" and the alleged debtor's name and contact details painted on the walls of our housing estates to name and shame these individuals.

I believe it is not in the interest of Singapore's debt collection agencies to be identified in the same vein, given how they could play a significant and professional role in the recovery of non-performing loans.

Yet, as MHA pointed out, there has been a high number of Police reports made against debt collection companies and debt collectors for conducting debt collection activities in a manner that caused alarm and nuisance to members of the public.

I am thus supportive of the introduction of this Bill to institute regulations to better manage the disamenities arising from such activities and I believe that there is a need to elevate our nation's stance towards debt collection and rehabilitation and hold these companies accountable for the conduct of their debt collectors. With this as a guiding principle, I have three clarifications in relation to the enforcement of this proposed regulation.

Firstly, the Debt Collection Bill has defined the scope of debt collection to mean any activity undertaken in Singapore which ranges from the finding of the debtor, to requesting, demanding or collecting of monies due. Section 45 highlights that the Minister may make regulations for restricting the manner or methods by which a licensee or any of its debt collectors, collect, or attempt to collect, any debt.

However, I wonder if the Minister can share any guidelines that will result in a debt collection infringing on the intended principles of preventing alarm and nuisance to the public and whether there are clearer regulations prescribing the methods which are deemed unacceptable for debt collection agencies. For example, we would have seen videos showing men in uniform creating a ruckus outside a debtors' home or office. In a September 2021 article by TODAY, a particular debt collection agency even publicly shared that they livestreamed themselves demanding debt repayment and uploaded such videos showing the debtors' faces as so-called evidence to protect themselves.

Where such encounters can be an emotional one, it is all the more important we clearly demarcate the out-of-bounds (OB) markers to better help guide their actions towards a less socially disruptive manner, which then fulfils the objective of this Bill. We should not let demeaning, disruptive and intimidating debt collection tactics take root in our society and our laws need to make clear that such tactics and behaviours are not acceptable.

Second, I note in section 8 of the Bill, in determining whether to grant a licence, the Licensing Officer may have regard to, and give any weight that the Licensing Officer considers appropriate to, any criteria and requirements that are prescribed, but may take into account any other matter or evidence that may be relevant. Similarly, in section 20 of the Bill, there is also significant discretion in determining whether an individual is a "fit and proper" person to be deployed as a debt collector.

Will the Minister make clear what are some of the current criteria, requirements and weightage that are under consideration when this Bill is operationalised? It is important that we provide regulatory clarity on this matter and ensure that individuals are not unfairly discriminated against, or perceive to be unfairly discriminated against, when seeking out employment in the debt collection industry, no different from any other regulated industry.

Finally, while I understand that there are public education efforts on indebtedness and borrowing, such as those by MoneySENSE, I wonder if we can intensify efforts to ensure individuals avoid the pitfalls of excessive debt and the dangers of compound interest and excessive hidden fees and charges associated with not servicing one's debt. Even for the well-educated and well-informed, this may not be straightforward. To cite a recent similar but unrelated example, a particular new bank lauds itself for transparency and simplicity and proudly proclaims that there are no cash advance fees for its card. However, there will be an effective interest rate of 26.9% per annum charged from the date of the transaction until the date of full repayment. If left unchecked, these charges could continue to snowball inadvertently.

While the intent of the Bill is to regulate this industry, I cannot help but wonder if this is equally an opportunity for us to explore how the debt collection effort can further evolve to become one that operates on a more holistic philosophy, as opposed to a zero-sum game, where debt collectors win by forcing debtors to cough up monies to pay down their debt. This could be through empowering or even requiring debt collection agencies to provide their debtors with referrals to means of assistance focused on facilitating debt repayment arrangements.

For example, Credit Counselling Singapore (CCS) has been a recognised organisation which works with The Association of Banks in helping the debt-distressed individuals manage their debt obligations. However, I understand that credit counselling and the creation of a debt management programme are voluntary and not mandatory programmes. In this case, education on how to manage debt and restructuring one's debt, where possible, can go a long way in preventing occurrences where debtors pay a seemingly infinite number of minimum payments that only service the interest charges. Notwithstanding my clarifications, I support the Bill.

Mr Speaker: Mr Louis Ng.

3.35 pm

Mr Louis Ng Kok Kwang (Nee Soon): Sir, this Bill empowers MHA to regulate debt collection activities in Singapore and provides the Police with necessary levers to stem problematic debt collection conduct. I applaud MHA for proposing to institute upstream regulatory interventions to manage the disamenities from debt collection activities. I also thank MHA for conducting a public consultation in June this year to gather public feedback in preparation for this Bill. I have clarifications on three areas.

My first clarification relates to the qualifications of compliance officers. The new section 4 provides for the appointment of compliance officers. A compliance officer's enforcement powers are significant. For instance, they can enter premises and question individuals, similar to Police officers. Given their significant powers and that they can be as young as 18 years old, it is important that compliance officers are fully ready for their role.

Can the Minister share what qualifications, experience and training will be required for compliance officers? Given that compliance officers have some powers similar to those of Police officers, will they be required to follow rules similar to the procedural rules under the Police General Orders?

My second clarification relates to the protection of compliance officers. Compliance officers are not public servants. This means that they are not protected by sections of the Penal Code that set out offences for obstructing public servants in discharging their public functions, for omitting to assist a public servant and for threatening injury to a public servant. This lack of protection is despite the fact that compliance officers do exert enforcement powers markedly similar to public servants, as I previously noted. The occupational risks are thus similar.

Will the Ministry consider extending the Penal Code to protect compliance officers? If not, how will it ensure that compliance officers are protected to the same extent as public servants when exercising similar powers?

My third and final clarification relates to the appointment of individuals as debt collectors. Section 20(2) allows the Licensing Officer to decline to allow an individual to be appointed a debt collector if the individual is not a "fit and proper person" to be deployed as a debt collector.

Section 20(3) allows the Licensing Officer to consider any prescribed criteria and requirement. Section 20(4) goes even further in allowing the Licensing Officer to take into account "any other matter or evidence that may be relevant". These provisions are broad. Can the Minister provide examples of what factors may be used to deem if someone is fit and proper to be deployed as a debt collector? Can the Minister also share if the approval to be deployed as a debt collector will be time-limited and subject to renewal? Notwithstanding these clarifications, Sir, I stand in support of the Bill.

Mr Speaker: Mr Dennis Tan.

3.38 pm

Mr Dennis Tan Lip Fong (Hougang): Thank you, Mr Speaker. According to MHA's media release for this Bill, there has been a high number of Police reports against debt collection companies and debt collectors for carrying out debt collection activities in a manner that caused alarm and nuisance to members of the public and MHA is instituting regulations to better manage these disamenities arising from such activities. I am glad that with this Bill, more is being done to regulate the operation of debt collection businesses and the conduct of debt collectors. I support this Bill but I do wish to seek some clarifications.

Mr Speaker, it is not uncommon to hear of reports of enforcement actions by private debt collectors, especially on social media and tabloids. I have also heard anecdotes of enforcement actions from my residents. Sometimes, we wonder whether certain actions taken by certain debt collectors have crossed the line as far as harassment and intimidation are concerned. With this in mind, I am, certainly, hoping that the new proposed regime under the Bill will be effective in regulating the conduct of debt collection companies and their staff.

Mr Speaker, we read in clause 45(2) that the Minister may make regulations in respect of the duties and responsibilities of debt collectors: under (f), the duties and responsibilities of licensees; under (g), the conduct of the class licensees and their debt collectors in collecting debts; and under (h), restricting the manner or methods by which a licensee or any of its debt collectors collect, or attempt to collect, any debt.

I also note from MHA's consultation paper to the proposed new regulations that there are eight rules of "dos and don'ts" pertaining to debt collection enforcement and activities by both debt collector individuals and the debt collection companies included at Annex B to the consultation paper. I presume that such rules will be listed in the subsidiary legislation and they must, of course, clearly stipulate what acts are allowed and what are not allowed, so that proper debt collection efforts can be carried out with the personnel involved knowing what is allowed and that debtors are not being subject to harassment, intimidation or abusive or unreasonable acts.

May I seek an update or confirmation from the Minister as to what other rules would be incorporated into the final regulations pertaining to conduct and acts allowed or disallowed during enforcement or collection, besides the five rules in the Annex which apply to individual debt collectors and the other three rules that apply to the debt collection companies?

May I also clarify whether the regulations expressly prohibit conduct, such as making contacts with debtors at late hours or early hours of the day, or communication with neighbours or colleagues about a debtor's debt situation, without affixing of a physical notice, or pursuing debtors on social media without making any threats as such, or even, generally, the carrying out of any acts embarrassing debtors in public?

Will the regulations provide debtors with a method for disputing and/or obtaining validation of debt information? These are arguably beyond what are stated in Annex B.

Next, may I ask how would the Government ensure that the regulations will allow for effective and reasonable debt collection methods that make sense commercially, whilst still able to draw a line to ensure that there is no undesirable intimidation, harassment or conduct?

Next, Mr Speaker, I would also like to ask what are the Government's plans to educate the public and enable the public to understand the requirements of such regulations, in order that as many members of the public will be able to discern for themselves what acts are allowed and what are not allowed. Public awareness will also reduce the chances of unnecessary intimidation and harassment. It may better enable the public to report meritorious cases of errant practices to the Licensing Officer so that proper action can be taken against the debt collection company and/or its staff under Part 4 of the Bill. If there are no public education plans as yet, may I urge the Government to look into an appropriate public education campaign to educate the public?

Next, I would also like to ask that the Government make it clear in its rules and public education materials the contact details and procedure for referring complaints of any acts or conduct by a debt collector which fall afoul of the requirements of this Act or its subsidiary legislation.

I would also like to ask the Minister what are the Government's plans to assist existing players to adjust to the new requirements and the new enforcement culture under the new regulation. Will the Government be giving them more time and, if necessary, any help they need in order to fulfil the new requirements?

Besides the conduct of debt collection activities, this Bill also serves to regulate the operation of debt collection businesses generally and sets up the regulatory framework for debt collection businesses. Having a proper regulatory framework for all debt collection businesses is good as it should help to ensure that the industry and personnel working in it work within a clear regulatory framework. This, in turn, creates certainty and allows regulatory action if businesses or personnel involved fall afoul of the same and we see this in clauses 17 to 18, 22 to 28.

May I ask the Minister for an indication of what is the size, in terms of revenue, employment and number of firms, of the debt collection industry in Singapore, both today, and, say, five or 10 years ago? Is the industry comprised mostly of small players or larger ones? Does the Government anticipate a consolidation of the industry following the new regulatory framework? Does the Government collect data on how many Singaporeans are affected by legal debt collection and/or enforcement activities at any one time or in the past two years?

Mr Speaker, before I end, I have some concerns regarding the eligibility of persons who can qualify to work in the industry under this Bill. I hope the definition of "fit and proper persons" has taken into consideration the current make-up of the industry's employees and its traditional and likely sources of recruitment. The exact eligibility criteria are not yet spelt out in this Bill but will probably be done in the subsidiary legislation.

Nevertheless, I hope that it will not seek to exclude persons permanently or for long periods of time from the industry merely on account of past misdemeanours. Equally, for those who are currently in the industry, instead of excluding them from future employment, could the Government consider a flexible plan to engage and provide training for these employees to ensure that they will be trained and prepared for future deployment in the industry?

May I also ask the Government whether there are any plans to help any of the existing businesses which may have an issue with the criteria of "fit and proper persons" during the transition period? Mr Speaker, notwithstanding my concerns, I support the Bill.

Mr Speaker: Mr Raj Joshua Thomas. Not here. Mr Leon Perera.

3.46 pm

Mr Leon Perera (Aljunied): Mr Speaker, Sir, I view this Bill as a step in the right direction and do not object to it. My speech will focus on several suggestions to improve our debt collection and management regime.

I shall focus my speech on four major points. Firstly, proposals to simplify the regulation of debt collection. Secondly, suggestions to provide transparency and accountability to members of the public. Thirdly, highlighting some risks associated with leaving debt collection activities to be regulated by private actors. Fourthly, ideas to strike a balance between inclusivity and encouraging robustness in the licensing regime regulating debt collection.

Apart from these major points, I would like to also briefly touch on a few wider social issues regarding debt. Before I proceed, I declare my interest as the chairman of an international research consultancy that has undertaken work in the field of debt management and related fields.

Mr Speaker, Sir, my first point is on the powers which the Bill gives to compliance officers who are private actors. To begin with, I note that the Debt Collection Bill grants powers to public officers, who may issue various different codes of practice. Such public officers may then appoint private actors, known as compliance officers, who would enforce and apply these codes of practice when examining the conduct and licensing status of debt collectors.

Such compliance officers are empowered to grant and renew licences to debt collection firms and to conduct investigations on such debt collection companies. This role would require sufficient training and familiarity with possibly multiple codes of conduct on the part of compliance officers.

Sir, this Bill empowers private actors to act as compliance officers, to take investigatory and enforcement action against debt collectors. Clause 4(1) of the Bill specifically provides that an individual who is appointed as a compliance officer cannot be an employee of a public authority or a public officer. As such, neither the debt collector, nor the compliance officers who oversee them, are public officers with statutory powers, vis-à-vis the public.

Privatisation of this regulatory mechanism may hold potential complications for both the debt collectors and members of the public. Given that debt collectors will have frequent touch points with members of the public, it is of importance that the powers, rights and identities of such debt collectors should be easily understood by the public.

However, the public will face significant challenges in verifying whether such debt collectors are legitimate. Furthermore, members of the public may not know the multiple codes of practice that may be proposed which pertain to debt collectors. An example of an existing Code of Practice is the Credit Collection Association of Singapore's Code of Conduct and Practice, and there may also be other new codes of practice which are proposed and implemented under subsidiary legislation by the Licensing Officers under this Bill.

As such, members of the public may struggle in the following three areas. Firstly, to know whether people who claim to be debt collectors are, indeed, genuinely licensed debt collectors. Secondly, to know when debt collectors have crossed the line when collecting debts. And thirdly, to find avenues of recourse or feedback pertaining to any potential abuses of power by debt collectors.

It is for this reason that I propose the following. Firstly, that individuals from the debt collection companies should be required to show identification and their licence before they engage in debt collection activities. This would mirror the Bill's proposed requirement for compliance officers to carry "at all times" their identification card when examining the compliance of debt collection activities of regulated businesses.

Secondly, in line with clause 13 of the Bill, there should be an online directory available to the public to freely search and verify the licence status of a debt collector. This would be consistent with current Government resources, such as the moneylender's directory, which serves to inform the public as to who the licensed moneylenders are, for example. This would bolster and strengthen the legitimacy of the debt collection industry by improving accountability.

Thirdly, as the Bill allows for the existence of multiple codes of practice which may apply to debt collectors, I propose that the various codes of practice, which may be enacted in legislation and subsidiary legislation, be unified, harmonised and given legal effect. This would ensure certainty and help members of public to have a common, clear understanding of the powers which debt collectors are allowed to exercise.

Furthermore, this ensures transparency and minimises potential abuse of power. Taking the United States as an example, their Fair Debt Collection Practices Act is a federal law that prescribes one singular, unified and legally binding piece of legislation. This legislation draws a clear distinction between legitimate debt collection and harassment or otherwise unlawful behaviour.

Fourthly, public education and awareness campaigns should be conducted among members of the public so as to educate them on what constitutes unacceptable debt collection behaviour by debt collectors. Furthermore, in order to deter errant debt collectors, perhaps the Minister could consider a reporting hotline or a platform on a Government-created app, which could be set up to enable members of the public to report errant debt collectors.

This would help to shift some of the burden of enforcement against errant debt collectors away from the compliance officers and licensing officers, and to directly empower members of the public to raise issues regarding errant debt collectors, without overburdening the general Police line.

Mr Speaker, Sir, my next point is on the need to strike a balance between inclusivity and encouraging robustness in the licensing regime for debt collection. I note that clause 8 of the draft Bill provides that the Licensing Officer can only grant a licence if the Licensing Officer is satisfied that the applicant is a fit and proper person to hold a licence, and clause 20 provides that the Licensing Officer can only grant approval for an individual to be a debt collector if they are satisfied that that individual is a fit and proper person.

However, the concern is that this might prevent existing individual debt collectors who are exemplary in their current work performance, but who have had some past involvement with the criminal justice system in respect of non-violent offences or existing debt collection firms who are managed by individuals with such a background, from obtaining licences under the proposed regime.

For instance, in a CNA article, one debt collection company raised concerns that "the proposed law would put a lot of us out of business because most of these debt collectors are ex-inmates" and also because "both of our directors have a chequered history". Of course, this does not mean that the granting of licences should be oblivious to a person's past record. But there are different types of past offences and it would seem fair that, for certain types of past offences, after a certain period of time, this should not count against the individual entering this debt collection profession.

Such an approach is consistent with the spirit of unlocking the second prison, and my Parliamentary colleagues, Mr Louis Chua and Mr Dennis Tan, have also made similar arguments.

In terms of determining whether individuals are fit and proper people to be debt collectors, I suggest that companies be allowed to send in testimonials on behalf of their existing employees who might otherwise fail the approval process due to their previous convictions and that adequate resources and a proper process be put in place to hear such appeals.

Furthermore, when considering whether an applicant for a licence is a fit and proper person, I would urge the Government to take into account factors, such as the company's record, years of experience and complaints record, in deciding whether or not to grant the licences.

Mr Speaker, Sir, I would like to conclude my speech by sharing some observations and making some points on wider issues regarding debt.

Firstly, I note that, currently, credit counselling services in Singapore are largely administered by private not-for-profit bodies, for example, Credit Counselling Singapore (CCS). CCS facilitates a debt management programme to help suitable borrowers repay their loans in manageable instalments.

However, for such debt management programmes provided by not-for-profits, not every borrower is eligible and credit counsellors are not obliged by statute to define, prescribe, apply or enforce any eligibility criteria. I hope the Government can look into how such credit counselling and debt restructuring services can be made more widely available, as well as for the eligibility criteria for various debt repayment schemes or debt management programmes to be expanded.

I also want to suggest that the Government work with not-for-profits and researchers to collect data on the reasons for which individuals experience debt management issues, so that financial literacy programmes, like MoneySENSE, can be focused on addressing precisely those issues and common mistakes. I would also like to call for more attention in financial education programmes to be given on risky retail financial products, such as some kinds of cryptocurrency products, which, anecdotally, have attracted many young retail investors.

Secondly, Sir, a 2019 study was reported in The Straits Times, which showed that chronic debt hurts the ability of the poor to make good decisions. A private charity, the Methodist Welfare Services (MWS) developed the MWS Family Development programme, where for every dollar of debt cleared by clients on their own, MWS will match with $2. This programme is targeted at low-income families living on a per capita income of less than $850.

As another reference point, in the UK, borrowers who are unable to repay their debts are, generally, eligible for Debt Relief Orders if they meet criteria, such as owing less than £30,000, having less than £75 a month in spare income and having less than a certain threshold of assets. In exchange for accepting certain restrictions for one year, these borrowers will be free from their debt after that one year.

In view of these reference points, would the Government consider launching similar debt reduction programmes for low-income families, with the aim of enabling them to escape the poverty trap, perhaps tied to participation in financial literacy programmes. This could be part of the holistic support provided by the social care sector to the poor, which includes many chronically indebted persons.

Mr Speaker: Order. I propose to take a break now. I suspend the Sitting and will take the Chair at 4.20 pm.

Sitting accordingly suspended

at 3.56 pm until 4.20 pm.

Sitting resumed at 4.20 pm.

[Mr Speaker in the Chair]

Debt Collection Bill

Debate resumed.

4.20 pm

Mr Murali Pillai (Bukit Batok): Mr Speaker, Sir, I join the hon Members who spoke before me in expressing support for the Bill. I have trimmed my original speech – you may be happy to know, Sir.

Mr Speaker: I am very happy. Thank you.

Mr Murali Pillai: Yes, because a number of questions that I originally intended to pose have already been asked, so, I only have two questions to pose to the hon Minister of State.

First, what would be the approach when staff of debt collection agencies deal with persons who dispute their debts?

The assumption for a debt collection agency when it is engaged by its client is that there is a genuine debt to be collected. In most instances, it would be a relatively straightforward matter through an acknowledgement by the debtor or as a result of a judgment issued by the Court. There are, however, occasions where the debts are disputed.

I have come across cases involving people who dispute the debts. For example, they may claim they are victims of impersonation or that the goods and services received are not within the quality expected under the respective contracts. Alternatively, they may not dispute the debts in principle but raise issue with the quantum instead.

In such situations and in the absence of a Court judgment, can the alleged debtors require the staff of debt collection companies to stop engaging them and refer the case back to the creditors?

In practice, the debt collection companies usually ignore the protestations of the debtors and continue to insist that the debts should be paid purely on the strength of the instructions of their principals, in this case, their creditors. This may be unfair.

In my respectful view, there should be clear rules of engagement where there is a potential for debts to be disputed. We may have to weave in requirements, such as the debt collection companies being personally satisfied that the debt collection assignments are genuine, before proceeding with the engagement. What guidance will the Ministry provide to deal with such circumstances?

Second and finally, I seek clarification on what will be the remit of the debt collection companies under the licensing regime. Will they be limited to collecting unsecured debts against principal debtors or guarantors or is it intended they may also be involved in the recovery of secured debts? Can they, for example, exercise the creditors' rights of repossession of assets that are charged in favour of creditors or subject to hire purchase agreements? If so, what safeguards will be introduced to ensure that such activities are done strictly within the bounds of the law and having regard to debtors' rights?

Mr Speaker: Mr Derrick Goh.

4.23 pm

Mr Derrick Goh (Nee Soon): Mr Speaker, Sir, against the backdrop of debt collection harassment as a cause for concern, this Debt Collection Bill is apt and timely. I would, first, like to commend how MHA has considered debt collection to be a legitimate activity that facilitates the fulfilment of financial obligations.

The proposed regulatory framework, in my opinion, achieves a fair balance between stemming undesirable conduct and avoiding being overly burdensome for the debt collection industry. It is on this premise that I have some comments and clarifications.

Firstly, I welcome the class licensing regime set out in clause 14 of this Bill, which minimises the regulatory conditions on lower-risk groups. However, the group of businesses under the class licensing regime is a very large category with organisations which vary in terms of their sophistication and debt collection processes. This category includes banks or credit card companies at one end and moneylenders or the smaller outfits on the other.

Given that moneylenders are, generally, less sophisticated, with fewer resources than banks, which are highly regulated, will MHA consider differentiating the class licences, for example, between the institutions that are MAS-regulated versus those that are not, so that licensing conditions are appropriate to the risk profile of the two groups?

Next, as part of the approval regime under clause 20 of this Bill, prospective debt collectors for licensed debt collection companies will have to undergo a fit and proper assessment by the Police. While criminal records are a relevant factor, it is also a vital information for the debarment tenure to be well-calibrated. This is so that it will be consistent with the principle that all ex-offenders deserve a second chance, as championed by Yellow Ribbon Singapore as well as Members in this House.

Referencing the security industry, I have engaged with my residents at the Meet-the People sessions, who were keen to be security officers but were repeatedly rejected by SPF in their application for a licence. One claimed to have had a dated conviction of 15 years ago, has since stayed crime-free and has been proactive in equipping himself with the relevant skills but still was not successful in getting a licence.

Therefore, can the Minister clarify whether ex-offenders who have turned over a new leaf will be given a chance to work as security officers and, specifically to this Bill, as debt collectors in this new regime? If so, can the Minister be clear on the parameters of what turning over a new leaf means, that they can be reconsidered to work in such jobs?

Moving on, in recognising that debt collection is a legitimate activity, I am also cognisant that some debtors can make malicious or frivolous complaints against well-behaved debt collectors to frustrate the debt collection process. However, the truth of each complaint can only be established after investigation, which draws on Police resources and potentially allows the debtor to delay the fulfilment of his or her financial obligations.

Can the Minister share if there would be further safeguards against such complaints, in addition to levers in the Penal Code relating to the provision of false information, to be fair to debt collection companies or collectors who conduct themselves well? In this case, as the Minister of State has earlier mentioned, complaints against debt collection companies will also be taken into account in the measurement of their behaviour.

Lastly, as communications and collection strategies shift to the digital realm, can the Minister explain if the Bill will regulate undesirable debt collection activities conducted on online platforms, such as through messaging or social media? What are other levers available to counter online harassment by debt collectors to ensure that such digital means will not be exploited as a regulatory gap for harassment of debtors?

Sir, in conclusion, I believe the regulatory framework introduced by this Bill will better address the law and order concerns, protect the general public as well as to professionalise the debt collection industry in the long run. I support this Bill.

Mr Speaker: Mr Don Wee.

4.28 pm

Mr Don Wee (Chua Chu Kang): Mr Speaker, Sir, there is a segment of our population which struggles to get loans from banks. Part of their demand for money will be met by moneylenders in return for higher interest rates.

As the Ministry has stated, debt collection is a legitimate activity and the borrower has legal obligations to meet the terms of the loan repayment. When the debtor is unable to do so, ideally, both lenders and borrowers should discuss and renegotiate the schedule of repayment.

Unfortunately, not all attempts for revised arrangements will work out smoothly. Some borrowers avoid communicating with their creditors altogether or disappear. Others even made false accusations of harassment against their creditors.

On the other hand, there are valid complaints, such as against increasingly strange, or some might say, creative methods used by the debt collectors. They are invariably unpleasant, often disturbing and, sometimes, outright alarming.

Some collectors do harass their targets and those around them, such as family members, neighbours and co-workers, in attempts to get the attention of the borrowers and pressurise them to pay up. We need to put a stop to these wrongful practices. Hence, I welcome the proposed legislation to set up a licensing regime and specify what the acceptable debt collection methods will be.

I would also like to take this opportunity to request that MHA look into the moneylending activities involving foreign workers, including migrant domestic workers. They are a vulnerable segment and susceptible to marketing attempts by lenders keen to exploit their need for loans. Mr Speaker, Sir, in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] Mr Speaker, Sir, I welcome the new Bill to regulate debt collection activities in our country through a licensing system which empowers the Police to stop inappropriate debt collection practices. Some debtors, unable or unwilling to repay the borrowed money, refuse to contact their lenders. They should discuss and negotiate to reschedule their debt repayments.

In order to recover the money, the debt collectors use all kinds of methods to collect the money. But some collectors go overboard and take extreme measures, harassing the borrowers' families, neighbours, colleagues and so on, or cause members of the public to panic, which is unacceptable to us.

Recently, I heard that some lenders, after learning that some people are facing financial difficulties, obtain their bank account numbers and directly remitted sums of money to them and then try to collect the debts and charge very high interest. I would like to ask whether the authorities have investigated such cases. Is this a serious problem? And is there a rising trend?

(In English): In conclusion, I support the Bill.

Mr Speaker: Ms Foo Mee Har.

4.31 pm

Ms Foo Mee Har (West Coast): Mr Speaker, Sir, in the course of my work as a Member of Parliament, I have experienced first-hand the devastating impact of debt collection harassment on residents, their families and their neighbours. Affected parties live in constant fear that the debt collectors may harm them and/or their loved ones. Some dread returning home or even picking up the phone for fear that the debt collector is after them. The stress and anxiety arising from debt collection activities have caused some of my residents to contemplate suicide.

There were cases where the outstanding debt owed is grossly overstated, with no basis. There were also incidents where residents were tricked into borrowing and then subjected to exorbitant interest charges and their repayment refused; and cases where the wrong parties are mistakenly identified and pursued by the debt collector.

So, Sir, the Debt Collection Bill is, therefore, timely to improve visibility and oversight of the debt collection industry and deter problematic debt-collecting behaviour. The licensing regime introduced under the Bill, to ensure that those involved are fit and proper, would go some way to hold those involved in debt collection accountable for their debt collection activities.

However, it is unclear what specific criteria the Police would use to assess the applicants as fit and proper. I would like to ask the Minister to elaborate on the key considerations for approval. Beyond screening for records of previous offences, how will the Police evaluate the suitability of the applicants to engage in debt collection activities, before granting the licence?

Sir, I would like to raise a query pertaining to the code of practice, as indicated under section 16. The code of practice under the Bill is intended to cover the conduct, duties and responsibilities of licensees. This is a critical component of the Bill to enable clear lines to be drawn on what specific actions would constitute unlawful activities and provide clarity on previously grey areas surrounding conduct of debt collection.

So, it would be useful to prescribe a clear set of lawful practices. It should contain clear rules on what is and what is not allowable, in order to provide debt collectors with a clear framework within which to operate, as well as to educate debtors on their rights. Sir, I would like to ask the Minister if such a list is available and where this sits under the Bill.

Mr Speaker, I would also like to request that the Ministry consider incorporating a requirement that all debt collection firms' management and staff undergo an accredited training programme covering the rules and regulations around debt collection, including the code of practice. The training may also cover relevant rules around the Moneylenders Act and the Protection from Harassment Act.

As part of the licensing programme, debt collectors should be required to pass a test on their understanding of the debt collection rules and regulations before being granted the licence. This will ensure that all parties involved are not only screened, but they are also adequately trained to understand and uphold the code of practice in carrying out their duties as debt collectors.

Sir, some countries have put in place schemes to give debtors in problem debt the right to legal protections from their creditors. One such example is the Debt Respite Scheme, or Breathing Space, in the United Kingdom. Under this scheme, debtors can access legal protection from their creditors and debt collectors for a specific duration of time to seek temporary relief from debt collection activities, including a provision to tend to mental health crisis.

Sir, I would like to ask the Minister if such a debt respite scheme may be considered, that might apply only to those with exceptional circumstances. This will go some way towards giving struggling debtors breathing space to get their financial and mental state in order.

Mr Speaker, Sir, let me end by recognising that debt collection is a legitimate business activity that facilitates the fulfilment of financial obligations. The Debt Collection Bill, when implemented well, has the potential to professionalise debt collection.

All borrowers should recognise that borrowing money is a huge responsibility. They are expected to repay in full and on time, according to agreed repayment terms. A loan is a legal obligation and the creditor has the right to take Court action to recover the debt. It is important that anyone considering a loan should fully understand their borrowing terms and the reasons for doing so. Notwithstanding my requests for enhancements, I support the Bill.

Mr Speaker: Minister of State Sun Xueling.

4.38 pm

Ms Sun Xueling: Mr Speaker, Sir, I thank the Members who have spoken on the Bill. Mr Dennis Tan asked about the state of the debt collection industry. As mentioned in my opening speech, we are not able to definitively assess the number of debt collection companies and debt collectors in Singapore because, currently, we do not have a regulatory framework.

Mr Murali Pillai asked if the Bill will regulate the collection of both secured and unsecured debts. The Bill defines debt as a monetary obligation owed by a debtor; the collection of such debts, whether secured or unsecured, will be regulated. However, the collection of non-monetary assets, including those used to secure a debt, will not be regulated for now, as such activities have been assessed to pose minimal law and order risk. Nevertheless, the Police can still rely on existing legislation like the Penal Code or Protection from Harassment Act to take errant collectors of non-monetary assets to task.

Mr Louis Chua, Ms Foo Mee Har, Mr Derrick Goh, Mr Louis Ng, Mr Leon Perera and Mr Yip Hon Weng asked about the criteria used by the Licensing Officer to assess whether an applicant is fit and proper to be granted a licence to operate a debt collection business or approval to be deployed as a debt collector.

As mentioned in my opening speech, the Licensing Officer will consider factors deemed relevant in assessing the applicant's propensity to engage in problematic debt collection conduct, such as past offences involving harassment or violence, as listed in the Second Schedule of the Bill. The Licensing Officer will also consider the severity of the offences and the length of time that has passed since the commission of the offence. The considerations used to assess whether an individual is fit and proper to work as a debt collector are similar to those used for security officers. The approval to be deployed as a debt collector is not time-limited. However, the approval may be revoked or suspended should the Licensing Officer assess that the debt collector no longer meets the fit-and-proper criteria.

We appreciate Mr Leon Perera's suggestion to provide opportunities for ex-offenders who may wish to join the industry. The Licensing Officer will consider their circumstances on a case-by-case basis.

Mr Derrick Goh asked if there will be differentiation among the class licensees, based on their respective risk profiles. Given that class licensees are already regulated by other Government entities, they are assessed to pose lower law and order risk, compared to debt collection businesses that are not currently regulated. As such, we assess that there is no need to further differentiate the class licences for now. Nevertheless, we will monitor the situation and recalibrate the class licensing framework if the need arises.

Mr Murali Pillai asked if there would be rules of engagement when debts are in dispute, including dealing with instances of debt collectors collecting debts from victims whose identities have been misused by impersonators to borrow money.

During my opening speech, I mentioned that we will be introducing regulations to guide the conduct of debt collection businesses and their debt collectors. For example, debt collectors will be required to verify that the subject of the debt collection from whom they are attempting to collect a debt, indeed owes the debt, such as verifying the subject's identity against the signatory to a debt contract.

The Debt Collection Regulations will also prohibit debt collectors from continuing to collect debt from a debtor if the debtor has informed the debt collection business or collector that the debt is in dispute or that the debtor has initiated a process to settle the debt through other means. The acceptable process for this will be prescribed in subsidiary legislation. This could include mediation or Court proceedings.

Debt collectors will also be required to ensure that there is a proper contract detailing the terms of appointment by the creditor, the debt to be recovered, the payment schedule and the debtor's identity. These will minimise potential disputes between the debtor and debt collectors.

I will also add that for instances of debt collectors collecting debts from victims whose identities have been misused by impersonators to borrow money, cheating by personation is punishable under section 419 of the Penal Code. If such cases are reported, the Police will investigate the matter. However, the Police do not investigate civil disputes about the debt.

Mr Louis Chua asked if there will be clearer regulations proscribing unacceptable debt collection methods and Mr Derrick Goh, Mr Dennis Tan and Mr Yip Hon Weng asked if problematic debt collection conduct on online platforms will be prohibited under the Bill. As mentioned in my opening speech, we will introduce the regulations prohibiting any behaviour that threatens the physical safety of the debtor or any other third parties, such as the debtor's family members. This includes sending text or social media messages to the debtor, threatening physical harm to the debtor or his or her family. Livestreaming of debt collection activities, in and of itself, is not an offence unless it crosses the threshold for other criminal offences, such as the Protection from Harassment Act.

Mr Dennis Tan asked if we will be introducing any regulations on prohibited debt collection conduct other than the ones we have announced in the public consultation paper. We, currently, do not have these plans.

Mr Leon Perera asked whether levers under various legislations could be unified and harmonised. Today, legislation, such as the Penal Code and Protection from Harassment Act, apply to everyone. Taking into account our observation of the debt collection activities, we are introducing additional levers that are more specific to the debt collection industry.

Ms Foo Mee Har and Mr Yip Hon Weng asked about issuing a code of practice and putting in place measures to ensure compliance with the code. Given that there will be regulations to guide the conduct of debt collection businesses and their debt collectors, we do not intend to issue a code of practice for now.

To address Mr Leon Perera and Mr Yip Hon Weng's question about how debtors may verify the legitimacy of debt collectors, we will require debt collectors to show proof of the Licensing Officer's approval, when asked to do so.

Mr Dennis Tan and Mr Yip Hon Weng asked about the potential avenues for members of the public to lodge complaints against errant debt collection activities. Members of the public may lodge a Police report online via the i-Witness Portal or Police’s e-services website. They may also do so in person at a Neighbourhood Police Centre or Neighbourhood Police Post. If immediate Police assistance is required, they should contact the Police at "999".

Mr Leon Perera and Mr Dennis Tan asked about educating the public on the regulations under the Debt Collection Bill. Information on the debt collection regulatory regime will be published on Police’s website. Mr Dennis Tan also asked if the Government can conduct a public education campaign. We thank the Member for the suggestion and we will study this.

Mr Derrick Goh and Mr Yip Hon Weng have voiced their concerns over debtors who make malicious or frivolous complaints against debt collectors to frustrate the debt collection process and asked if there will be safeguards against these debtors. As the Member rightly pointed out, furnishing false information to cause Police to act against debt collectors is punishable under section 182 of the Penal Code. Police will investigate and take action against the debtor if an offence is disclosed.

There are also safeguards within the Bill to avoid penalising innocent debt collection businesses and debt collectors. Before regulatory action can be taken against the licensee or debt collector, the Licensing Officer must first give a written notice to the licensee or the debt collector and provide at least 14 days after the written notice is served, for written representations to be made to the Licensing Officer with respect to the proposed regulatory action.

On the questions raised by Mr Yip Hon Weng on regulating the remuneration structure for debt collection businesses, the Bill allows the Minister to make such regulations. However, we have assessed that there is no need to do so currently. Nevertheless, we will monitor the situation closely.

Ms Foo Mee Har suggested for the management and staff of debt collection businesses to undergo accredited training programmes covering the debt collection regulations and for debt collectors to pass a test before they are approved by Police to be debt collectors. Mr Dennis Tan asked about training for potential debt collectors. We will require licensees to put in place measures, such as proper training, to ensure that their debt collectors understand and comply with the Debt Collection Bill and other written laws. However, the Police will not be administering tests for debt collectors.

Mr Yip Hon Weng asked about the selection of licensing officers and Mr Louis Ng asked about the appointment and protection of compliance officers. Compliance officers will be suitably trained before they carry out their duties. Unlike licensing officers who are Police officers, compliance officers will not be authorised to detain or arrest any individual, to search any place or individual, or to seize any property.

There will be audit checks on compliance officers to ensure that they are proficient in carrying out their duties and these safeguards are similar to other regulatory regimes under the Police’s purview.

On Mr Louis Ng’s point on protecting compliance officers, they will be deemed to be a public servant for the purposes of the Penal Code and will receive the same protection as public officers when exercising powers under the Bill.

Mr Dennis Tan asked how we will assist existing players to transit into the new regulatory regime. As mentioned in my opening speech, the Bill provides saving and transitional provisions to ensure that sufficient time is provided for existing debt collection businesses and debt collectors who wish to continue operating their debt collection business or acting as debt collectors to transit into the new regime.

Mr Louis Chua, Ms Foo Mee Har, Mr Leon Perera, Mr Don Wee and Mr Yip Hon Weng asked a few questions which are beyond the scope of the Bill but have close nexus with debt collection. For example, whether there will be guidelines to help residents not fall prey to scams, whether the community legal clinics are sufficient for residents to seek legal advice, whether there will be measures to protect vulnerable segments of the population from excessive borrowing and making debt counselling and restructuring more widely available, as well as whether we can consider introducing a scheme for debtors to seek temporary relief from debt collection activities, similar to the Debt Respite Scheme in the UK. We will pass this feedback to the relevant agencies to study separately.

On Mr Don Wee’s question regarding unlicensed moneylending syndicates that resort to depositing unsolicited amounts of money into the bank accounts of ex-borrowers and forcing them to make payments for the unsolicited loans, there have been such cases reported since 2011. The Police will continue to monitor them closely. Members of the public who wish to take up loans should only borrow from licensed entities, such as banks, financial institutions and licensed moneylenders. We also encourage members of the public to be vigilant and exercise due care before furnishing personal particulars and banking credentials for any purposes.

Mr Speaker, Sir, I hope I have addressed the Members’ concerns. The Bill will help improve the conduct of the debt collection industry and better address disamenities that may arise from problematic debt collection conduct. Once again, I thank Members for their strong support for the Bill. Sir, I beg to move.

Mr Speaker: Any clarifications? None.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Ms Sun Xueling].

Bill considered in Committee; reported without amendment; read a Third time and passed.