HARD TO TELL IF LEGAL OR ILLEGAL

KOTA KINABALU: The public and even the authorities these days are finding it hard to differentiate between licensed money lenders and illegal money lenders (Ah Longs).

This is because in some cases, even licensed money lenders are involved in the use of Ah Long tactics and creating Ah Long networks in their operations.

"Even some enforcement authorities I spoke to could not differentiate between the two," said Samsudin Mohamad Fauzi, President of the Consumer Safety Association Kuala Lumpur (PKP) who wanted to highlight and expose such fraudulent practices.

"During the six days I was in the State capital, I found the problem here no different to the peninsula.

"Similarly, the people here are also too afraid of these Ah Longs and some licensed moneylenders.

"I also found Ah Longs here running their operations from the peninsula and they send their employees here to find borrowers and these workers act like thugs to scare borrowers into submission.

"This situation is worsened when they wilfully inform borrowers that they have a good relationship with the local authorities.

This are all lies and aimed at intimidating their borrowers.

"Likewise, most of licensed moneylenders also tend to act like Ah Longs.

The method they use is the same as Ah Long in imposing high interest rates, threatening and stalking their borrowers, getting borrowers to sign blank documents, dealing beside the road or in a restaurant, appointing agents, withholding their company name from borrowers and imposing various fees purportedly to process loans.

"By right licensed moneylenders have to fulfill the requirements of the Moneylenders Act 1951 and the Rules and Regulations of the Registrar of Licenses which for the State of Sabah is the Ministry of Finance, Sabah."

He said the allowable interest rates for unsecured loans may not exceed 18pc per annum, not exceeding 1.5pc per month and the borrower must sign the 'J' agreement form which should be duly completed by both parties and list the loan amount, interest rate, repayment period, the amount of the final payment and information on borrowers and lenders.

"Money lenders are only allowed to charge stamp duty on borrowers which is typically only around RM20 according to the rate of total loans.

No other fees may be charged e.g. deposits, legal fees and others.

"While for secured loans the interest rate must not be more than 12pc a year i.e. not exceeding 1pc per month and the borrower and moneylender must sign an agreement in the 'K' form. All collateral details must be stated in the agreement form.

"Moneylenders are strictly required to provide a copy of this loan agreement form to the borrower and there is no compromise on this matter.

"Whether the borrower wants or does not want such an arrangement form, it is not an option but must be given and the moneylender must prove that the agreement form was submitted to the borrower if examined by the authorities or during the legal process in court later.

"Borrowers and moneylenders are also protected under the same Act.

Moneylenders cannot in any circumstances hold on to or deal with an ATM card, credit card or checkbook of the borrower and if this happens then the moneylender has committed an offence under this Act and punishment can be imposed.

"Moneylenders cannot go to the home, workplace or trail the borrower if the borrower fails to repay the debt. This action is also a serious offence under this Act which is punishable by a fine or imprisonment or both and if the offence is repeated the punishment of whipping is additional to this charge."

He said moneylenders also have the right to get back their loans by enforcing the loan agreement in the event of a breach of contract such as borrowers failing to pay the monthly payment for a given period.

"Moneylenders do not need to go to the house of the borrower if the monthly payment is not received, they can send a reminder notice via registered post. Keep in mind if the moneylender takes court action for failure to repay the debt, all court costs, would be borne by the borrower."

Samsudin said as Ah Long offences they can be fined between RM250,000 and RM1 million and imprisonment and caning as an additional punishment for repeated offences.

"I want to state that these Ah Longs and those who act like them are actually not impervious and not above the law.

"I also call on the media to try to spread news that would put fear into these Ah Longs and dishonest licensed moneylenders and not to highlight news of what happens to the victims but what the victims can do otherwise.

"Do not let this problem continue and let all parties come together to fight these Ah Longs and licensed moneylenders who misuse their licenses for the sake of national security, the people and future generations."

Samsudin listed as the result of studies by PKP, offences committed by licensed moneylenders include taking advantage of desperate borrowers, making them sign a blank document or payment voucher as a condition of loan products and borrowers' ATM card and passbook being held by licensed moneylenders.

The amount stated on the loan agreement and payment voucher being different from the actual amount of loan disbursement, the interest rates higher than they should be and the borrowers not given a copy of the loan agreement.

Other offences include fraudulently convincing borrowers that the high interest rates charged are right because they (licensed moneylenders) have the licence to do so and imposing various high payments on the borrowers as a condition of loans.

"Loans promised not being equal to the amount produced and agreement being renewed with increasing loan amount without issuing payment when the borrower requests for deferment of payment of principal or interest due to financial difficulties and monthly expenses (overlap)," he said.

He also listed the use of a third party such as debt collectors when the victim refuses or fails to pay, such as visits to the workplace or residence of the borrower for the purpose of intimidating, humiliating and insulting the borrower.

"They also cheated the borrowers from seeking justice due to the use of the loan agreements with false amounts, suppressing and denying the rights of borrowers by not giving any copies of documents, evidence of acceptance, receipt of payment and imposing their own laws aimed at intimidating the borrowers," he said. (DE)