First-phase measures to enhance regulation of licensed money lenders take effect today
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The Government’s first-phase measures to enhance the regulation of licensed money lenders (money lenders) take effect today (August 1), including prohibiting money lenders from requesting borrowers to provide loan referees, and introducing “debt servicing ratio” caps for unsecured personal loans of low-income earners.
With the above measures in place, money lenders are not allowed to request borrowers to provide loan referees, and members of the public need not worry about facing harassment due to acting as a loan referee. Setting “debt servicing ratio” caps – for borrowers with monthly incomes of HK$6,000 or less, the cap is 35 per cent, and for borrowers with monthly incomes from HK$6,001 to HK$12,000, the cap is 40 per cent – will not only protect the public, but also encourage money lenders to grant loans more responsibly, thereby helping to address the issue of excessive borrowing and foster a more healthy market development.
The second-phase measures will be rolled out on June 1 next year, and will include requiring all money lenders engaging in unsecured personal loan businesses to regularly submit personal credit information of their unsecured personal loan borrowers to the Credit Data Smart (CDS). Money lenders will also need to meet specific requirements to join the CDS to obtain personal credit information of borrowers for loan application assessment.
The Financial Services and the Treasury Bureau (FSTB) hopes that the community will continue to support implementation of the measures, with a view to addressing the issue of excessive borrowing via a multipronged approach. The FSTB and the Companies Registry have been maintaining close liaison with the money lending industry, and have provided information and guidance to money lenders in order to ensure the smooth implementation of the measures.