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DAB calls for curbs on loans to FDHs

13 May 2024

DAB wants the govt to limit the amount of loans extended to FDHs (RTHK photo)

The Democratic Alliance for the Betterment of Hong Kong has called on the government to set a limit to the amount of money foreign domestic helpers are allowed to borrow from lending companies.

The call made earlier today was partly in reaction to the revised rules on the code of conduct for employment agencies which the government released last week.

Speaking at a press briefing, lawmaker Frankie Ngan said he and his fellow DAB members have received complaints from employers who were frustrated with having to deal with collectors chasing after helpers who failed to repay a loan before leaving Hong Kong.


Ngan suggested the government require financial companies to come up with a credit database that will show at a glance whether a particular domestic helper already had outstanding loans. 

This was the same device drawn up voluntarily by financing companies several years back, for the purpose of cross-checking whether a particular helper asking to borrow money from them was still paying off an earlier loan. 

But judging from the number of FDWs who still got mired in debt because of over-borrowing from various financial institutions, the system did not seem to have worked.

The Consulate through then Consul General Antonio Morales also sought to enlist the help of Hong Kong legislators to back a similar plan, and also to call on the government to reduce the legal interest charged on loans, which was then at 60% per annum.

The second proposal was taken up by the Legislative Council eventually, and as of Dec 30, 2022, the statutory interest rate cap had been lowered from 60% to 48%, and the extortionate rate further reduced to 36% from 48%.

Meanwhile, Ngan also urged authorities to further explain the changes under the new code to agencies, employers and the workers.

"The DAB requests the government to do more promotion and education for the agencies, especially as it is a new regulation for them,” he said.

He added it would be difficult to implement the new rules unless everybody concerned had a deep understanding of what they entailed.

Among the controversial provisions of the revised code that took effect on May 9 was one that requires agencies to include in their service agreements with employers a breakdown of the services that they are providing, along with the corresponding fees.

This is to allow employers to demand a full or partial refund of the fees they paid in case the FDHs recruited for them by the agency self-terminates the contract, or is prematurely terminated.

While employers stand to benefit from this provision, agency representatives called it unfair, saying early termination of contracts could be due to several reasons, over which they do not have any control.

Migrant workers, on the other hand, fear that a rash of termination could ensue if employers are able to recover service fees, as these used to deter some of them from sacking their domestic helpers on a whim or at the slightest excuse. 

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