Speech on the Debt Collection Bill
I spoke on the occasion of the 2nd reading of the Bill expressing support for the licensing of debt collectors so as to reduce the instances of debtors being unreasonably harassed and the public being alarmed. In my speech, I raised 2 points:
- What will be the approach when the debtors dispute that debts are owed; and
- Whether the debt collectors will be allowed to recover assets charged in favour of creditors to secure debts such as items purchased through Hire Purchase Act.
My speech may be accessed below.
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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…[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 bounds of law and having regard to debtors’ rights?
