First reading of the Debt Collection Bill



1. The Debt Collection Bill 2022 was presented for first reading in Parliament today. The bill will empower the Ministry of Home Affairs (MHA) to regulate debt collection activities in Singapore and provide the police with the necessary levers to stem problematic debt collection practices.


2. In recent years, there have been a large number of police reports against debt collection companies and debt collectors for carrying out debt collection activities in a manner that has alarmed and concerned the public. members of the public.

3. In light of growing public concern, the MHA will institute regulations to better manage the inconvenience resulting from such activities.

4. The MHA considered the comments provided as part of the public consultation exercise which was held from June 15 to 29, 2022.

Main provisions of the debt collection bill

5. Debt collection is a legitimate activity that facilitates the fulfillment of financial obligations, and the MHA will take a pragmatic approach to regulating these activities. This bill will provide us with legislative levers to impose upstream controls on the industry through a licensing regime for debt collection companies and a licensing regime for debt collectors. The main features of the bill are set out below.

Definition of debt collection activity

6. The Bill will define debt collection activity as any activity undertaken in Singapore that involves finding the debtor of a debt, or requesting, demanding or collecting from the debtor money owed in respect of the debt .

Scope of the regulations

seven. Licensing scheme. A licensing regime will be introduced for debt collection companies.[1] These companies will need to apply for a license to engage in debt collection activities and will be held accountable for the conduct of their debt collectors. Debt collection companies, including their key retainers, must also be assessed by the police to be fit and proper to offer debt collection services.

8. Persons and entities collecting debts to themselves that have not been purchased from another party shall not not fall within the scope of the regulations, unless it is a regulated company, as specified in the following paragraph. Examples include people collecting personal loans owed to them and internal credit-control departments collecting debts owed to the business.

9. Category Licensing. A class licensing regime will be introduced for entities carrying on a regulated activity that primarily consists of lending money and collecting money owed to their own business. This will include banks, merchant banks, approved credit or charge card issuers, finance companies and approved and exempt lenders. These entities will not be required to be individually licensed. Compared to individual licensing, a class licensing framework allows police to impose regulatory conditions on these low-risk groups, while minimizing regulatory compliance costs.

ten. Accreditation scheme. An approval system will be put in place for anyone wishing to become a collection agent for an approved debt collection company. The person will have to file a joint request with the collection company for approval by the Police. Debt collectors will be subject to police vetting and must be assessed as fit and proper. Approvals can be revoked, for example if the debt collector breaks the law, rules or regulations. Employees of collectively licensed companies who collect debts on behalf of these companies will not need approval.

11. Exclusions. Entities whose activities have been assessed as posing a low risk of public disorder will be excluded under the bill. These entities will include persons engaged in court-administered debt collection activities, licensed insolvency practitioners, regulated lawyers and non-practitioners, legal joint ventures, licensed foreign law firms, law firms eligible overseas and Singapore law firms.

Application of the regulations

12. Offenses for debt collection activities without a license. Unauthorized debt collection activities will be criminalized under the bill, with penalties including fines and up to five years in prison. This will include the deployment of unlicensed individuals to act as collection agents for debt collection entities.

13. Violations by Licensees, Class Licensees and Authorized Collectors. Measures will be taken against regulatory violations. This will include suspension or revocation of licenses, class licenses or approvals.

14. Powers to administer the plan. The bill will give the police the power to grant debt collection licenses, modify or add conditions of licence, class license and approval, and suspend or revoke licenses, category licenses or approvals. These powers will be subject to the necessary safeguards, such as remedies and the obligation for the police to give sufficient notice of their actions.

[1] Debt collection companies are entities engaged in the business of debt collection, the business of which is to collect any debt from a debtor (a) on behalf of another person, or (b) when the person mentioned first purchased the claim, as defined in S2(1) of the Debt Collection Bill.

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