Response: Public Consultation on Enhancing Regulation of Licensed Money Lenders
Release Date: 2025-07-11
| Financial Services and the Treasury Bureau, Unit 6, Financial Services Division | Email Delivery |
| The Government of the Hong Kong Special Administrative Region of the People's Republic of China | money-lenders-consult@fstb.gov.hk |
| 15/F, Queensway Government Offices, 66 Queensway, Hong Kong |
To: Unit 6, Financial Services Division, Financial Services and the Treasury Bureau
Response: Public Consultation on Enhancing Regulation of Licensed Money Lenders
1. Support for a Complete Ban on Loans to Foreign Domestic Helpers
I. Unique Risks of Loans to Foreign Domestic Helpers
- The consultation document states that the bad debt rate for foreign domestic helpers is as high as 9.9%, and their borrowing often leads to harassment of employers. Current measures (such as the consultation system) have not solved the problem.
- Our association recommends: Referencing Singapore's strict restrictions on non-citizens, legislation should be enacted to prohibit money lenders from providing any unsecured personal loans to foreign domestic helpers, thereby eliminating the risk of employer involvement from the source.
2. Enhancing Control over Income and Loan Ratios
II. Support for a Dual System of Loan Limits and Repayment Ratios
- Support the government's proposal to set cumulative loan limits based on income tiers (monthly income ≤ HKD 5,000: cumulative loan ≤ 1 times monthly salary; monthly income HKD 5,001–10,000: cumulative loan ≤ 2 times monthly salary) and repayment ratio caps.
Enhanced Recommendations:
- Penetrative Income Verification: Require money lenders to verify the authenticity of the borrower's income through "Credit Reference Bureau" to eliminate false reporting.
- Income and Loan Ratio Control: Strictly control the ratio between the borrower's income and loan amounts to ensure the borrower has sufficient ability to repay the loan. Practices from other regions can be referenced, such as setting loan limits based on the borrower's income.
- Cross-Institution Loan Aggregate Control: Expand the scope of cumulative loan limits to all financial institutions (including banks and finance companies) to prevent borrowers from excessive borrowing across platforms.
- Strengthen Borrower Affordability Assessment: When applying for loans, lenders should further assess the borrower's affordability, including income, expenses, and credit status.
3. Other Key Recommendations
III. Abolish the Loan Consultation System
- The consultation document points out that the consultation system causes third-party harassment. Our association recommends its direct abolition, with alternatives such as:
- Loans to foreign domestic helpers require written consent from employers (if loans to foreign domestic helpers are not completely banned);
- Other borrowers should have their repayment ability verified by an independent third party (such as social workers).
IV. Mandatory Access to "Credit Reference Bureau" for Lenders
- Currently, only 36 money lenders have access, severely limiting data integrity.
- Improve Credit Data Sharing: Encourage all licensed money lenders to join the "Credit Reference Bureau" for more accurate assessment of borrowers' credit conditions.
- Legislative Requirement: All licensed money lenders must regularly upload credit data to the "Credit Reference Bureau," or face license revocation.
V. Optimize Regulatory Enforcement
- Unified Regulatory Authority: Support the Companies Registry in taking over the functions of the Licensing Tribunal to improve enforcement efficiency.
- Disclose Non-compliance Records: Establish a "List of Non-compliant Money Lenders" on the government website, including significant penalties for repeat offenders (such as increasing penalties to HKD 500,000).
- Regulation of Loan Advertisements: Strictly regulate loan advertisements to prevent misleading promotions and ensure borrowers fully understand the risks and costs of borrowing.
VI. Targeted Public Education
- Enhance financial education for low-income groups and foreign employees to improve their financial literacy and awareness of borrowing risks.
- Employer awareness should be increased in promotions to foreign domestic helpers, such as requiring lenders to send loan confirmation letters to employers.
- Collaborate with the Labour Department to include a "borrowing risk" module in mandatory seminars for foreign domestic helpers upon arrival.
For any questions or further information, please feel free to contact Mr. Christ Tsang ( / email: ) or myself (phone: / email: ).
Mofiz Chan
Chairman
Hong Kong Securities and Futures Professionals Association