AMENDING SMALL CLAIMS TRIBUNAL ACT 1984 TO OFFER COST-EFFECTIVE CIVIL MEASURES TO RECOVER MISDIRECTED FUNDS FROM ELECTRONIC TRANSFERS
With the increasing prevalence of digital transactions, including use of PayNow, anecdotally, there are more cases of mistaken payments. For those who have made mistaken payments, to commence civil action to recover their payments may not be a cost-effective exercise. This is because, currently, they have to commence action in the State Courts. In my research, I noted that in UK, such persons would be able to commence action in the Small Claims Tribunal, which is a court that does not involve lawyers and the procedures are simpler for lay people to follow. I therefore suggested to the Minister for Law that the Small Claims Tribunal Act be amended to allow persons to recover funds made by mistake. The Minister informed that his Ministry will review my suggestion in future. My PQ and his answer may be accessed below.
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Mr Murali Pillai asked the Minister for Law having regard to the current adoption rate of electronic fund transfers and cases involving payments to erroneous accounts, whether the Ministry will consider amending the Small Claims Tribunal Act 1984 to provide cost-effective and quick civil measures to recover misdirected funds.
Mr K Shanmugam: If a person has made an electronic fund transfer in error, he should inform the unintended recipient or his bank of the mistake, and request for the funds to be returned. The Monetary Authority of Singapore has issued guidelines on this issue. Under these guidelines, the sender’s bank should help to engage the recipient’s bank to inform the unintended recipient, so that a refund can be initiated. This framework helps parties resolve erroneous payments without the need to commence legal proceedings. If the recipient refuses to return funds that have been transferred in error, the sender should make a police report. It is an offence under the Penal Code for the recipient to retain or use the funds when he has been informed that it was transferred in error.
It is also possible for the sender to bring a civil claim against the unintended recipient. Such a claim must, depending on its value, be filed with the Magistrates’ Court, District Courts, or the General Division of the High Court.
I thank the Member for his suggestion, which we will study in future reviews of the Small Claims Tribunals Act.