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| Some employers or former employers are harassed when their FDWs fail to repay loans |
The Hong Kong government
is set to launch a public consultation this month on how to further regulate
unsecured personal loans to address the issue of excessive borrowing of foreign
domestic workers.
This was announced by
the Acting Secretary for Financial Services and the Treasury, Joseph Chan,
during the question and answer session at the Legislative Council yesterday,
May 28.
Chan was responding to
questions raised by legislator Judy Chan on reports that employers or former
employers of FDWs were harassed by money lenders or collectors after the FDW
borrowers defaulted on their payment.
Judy Chan asked for
statistics on such cases, and reminded the Financial Services official of the
government’s pronouncement last November that it would hold a public
consultation and education on excessive FDW borrowings in the first half of the
current year.
Paul Chan said that in
2024 there were 11 reports of employers being harassed by debt collectors while
there have been six such cases so far this year. All the cases were forwarded
to the police for further investigation and appropriate action.
“The
Government is very concerned about the borrowing issue of foreign domestic
helpers (FDHs) and will strictly regulate licensed money lenders and step up
publicity and education etc, to better protect the interests of FDHs and their
employers,” he said.
Paul
Chan said that the public consultation on excessive borrowing will not only
tighten rules on unsecured personal loans, it will also strengthen protection
for loan referees and people like employers who played no role in their helper’s
borrowing.
After the
public consultation, the views submitted will be collated and summarized, and
the Legislative Panel on Financial Affairs will be consulted when finalizing
the relevant measures and in formulating legislative proposals.
Paul
Chan said that the law is clear that money lenders and their debt collectors can
only recover debts from the person who undertook the loan.
“A money lender and
his debt collector shall not, while trying to locate the whereabouts of
debtors, harass anyone, adopt unlawful or improper debt collection practices.
Therefore, if a FDH employer or former employer discovers that his/her
residential address is used improperly and feels harassed, he/she may lodge a
complaint with the money lender concerned and request immediate cessation of
his improper debt collection behaviours,” said Paul Chan.
He added that any
breach of the licensing conditions for money lenders could incur a maximum fine
of $100,000 and imprisonment for two years.
A complaint that a money
lender had harassed a FDW employer or former employer could serve as a ground
for the Registrar of Money Lenders or the police to revoke its licence.
As part
of the continuing effort to find a solution to the problem, Paul Chan reminded the
legislators that in May last year, employment agencies were told to inform the
Labour Department whether they are associated with any financial institution
when applying or renewing a licence.
Since
then and until the end of April this year, LD reportedly received and processed
declarations from 3,362 EAs and among them, 41 declared affiliations with
financial institutions.
Paul
Chan said the government continues to closely monitor the money lending sector
and has taken various steps to further regulate their activities.
In
2021, money lenders were required to assess the borrower’s repayment ability
and take this into consideration when extending loans. In addition, money lenders
were obliged to immediately cease using a referee’s information once they
become aware that the written consent was in fact not signed by the referee.
In
2022, the government lowered the statutory interest cap rate from 60 to 48
percent and the threshold of extortionate rate from 48 to 36 percent.
