 |
| Studies show low repayment rate by FDHs who take out loans |
Low-income earners, particularly
foreign domestic workers, will only be able to take out loans set at a maximum
amount of between 35% and 40% of their monthly salary from August 1.
In addition, there will be a complete ban on using loan referees, which lawmakers say should reduce harassment by debt collectors, particularly the employers of absconding FDHs.
There are among strict new regulations released on Friday by the Financial Services and Treasury Bureau, following public consultations from June to August last year.
The government said that the regulatory measures will be rolled out in two phases to protect public interest.
In the first phase, which takes effect on Aug 1, monthly repayments for borrowers earning HK$6,000 or less (including most foreign domestic workers whose minimum monthly salary is set at HK$4990) will be capped at 35% of their income. The maximum limit goes up to 40% of the monthly salary for those earning between HK$6,001 and HK$12,000.
To ensure that the caps are followed, all licensed money lenders are required to share information for every individual that obtains a loan from them.
In the second phase that begins on Jun 1, 2027, all moneylenders who extend unsecured personal loans would have to submit their borrowers’ personal information to the Credit Data Smart platform once every 30 days. This would allow the sharing of information between moneylenders and consumer credit reference agencies.
The Bureau will brief the Legislative Council’s Financial Affairs panel next month on the consultation outcome and the details of the various measures.
At a media conference on Sunday, Secretary for Financial Services and the Treasury, Christopher Hui said the new rules would prevent debt collectors from chasing referees, particularly employers, for loans taken out by their helpers.
“I think one of the issues that we come across very often is that many households are being used as referees in some of these lending activities of their domestic helpers. So that's why from August 1 this year, we require that no more such requirement can be imposed on in the lending activities, in a sense that no referee will be required in such lending activities with a view to protecting our citizens,” he said.
But he added the repayment cap applies to everyone earning HK$12,000 or less, and not just to FDHs.
The report contained data that showed that excessive borrowing was particularly prevalent among low income earners particularly FDHs, some of whom take out massive loans just before their contract is due to end, then disappearing.
The said practice is said to have resulted in the employers being harassed by debt collectors out to recover the helpers’ unpaid loans.
