Separating Clients' Deposits and Payments to Prevent Unlawful Withdrawal of Funds
Ministry of Trade and IndustrySpeakers
Summary
This question concerns Mr Gan Thiam Poh’s inquiry into mandating separate client accounts for merchant deposits and making unlawful withdrawals a criminal offence. Minister for Trade and Industry (Industry) S Iswaran stated that broad requirements like escrow accounts are too onerous and would increase costs for consumers. He highlighted that the government instead utilizes the CaseTrust accreditation scheme, where businesses often provide deposit protection through insurance against insolvency. Over 700 businesses in the motoring, renovation, and spa sectors are currently accredited to safeguard consumer interests. The Minister noted ongoing efforts to expand this scheme to the hair, cosmetology, and catering industries to enhance retail sector confidence.
Transcript
21 Mr Gan Thiam Poh asked the Minister for Trade and Industry (Industry) whether the Ministry will consider enhancing the protection of consumer interests by requiring merchants and sellers to set up and maintain client accounts to keep the deposits/payments separate from their daily operating accounts and making unlawful withdrawals from these accounts a criminal offence.
Mr S Iswaran: The Government’s approach to consumer protection is based on promoting fair trading among retailers and helping consumers make informed purchasing decisions. This approach has benefited consumers and businesses, as the vast majority of our retailers are legitimate businesses who want to serve their customers well.
As the nature of consumer transactions can vary widely in practice, broad-based requirements, such as mandating that deposits be put into escrow accounts, would be onerous and raise the cost of doing business which will, ultimately, be passed on to consumers.
In sectors where deposits are the norm, the Consumers Association of Singapore (CASE) has worked with sector associations to develop the CaseTrust accreditation scheme. Most businesses accredited under the CaseTrust scheme provide protection for consumers' deposits. This usually takes the form of business insurance which will compensate consumers if the business becomes insolvent.
Currently, more than 700 businesses from various sectors offering motoring, renovation and spa and wellness services are CaseTrust accredited. CASE recently announced that it has partnered the Hair and Cosmetology Association (Singapore) to work on CaseTrust accreditation to promote fair trading, improve the sector's image and raise consumer confidence. CASE is in similar discussions with the Association of Catering Professionals. We encourage more businesses to become accredited as this helps to provide consumers with greater confidence that their interests are safeguarded.