Govt enhances regulation of licensed money lenders to curb over-borrowing

The Hong Kong government proposed enhancing the regulation of licensed money lenders, capping "debt servicing ratio" at 35 percent for monthly earners of HK$6,000 or less and 40 percent for those earning between HK$6,001 and HK$12,000, starting from August 1, according to Secretary for Financial Services and the Treasury Christopher Hui Ching-yu.

The HK$6,000 income threshold was set with reference to the average monthly wages and food allowance of domestic helpers, while the HK$12,000 benchmark aligns with the income ceiling of the Working Family Allowance Scheme under the Working Family and Student Financial Assistance Agency, Hui said.

He emphasized that the tightened regulations target not just domestic helpers but all low-income individuals.

The government has also communicated with the relevant Consuls-General and organized seminars for foreign domestic helpers to explain safe and legal borrowing channels, he added.

Besides, the authority will prohibit money lenders from requiring loan referees and suggest the inclusion of risk warning statements in loan contracts, effective August 1.

Hui noted that this measure is designed to prevent harassment caused by non-borrowers being listed as loan referees, ensuring that information unrelated to the borrower does not fall into the hands of money lenders.

Additionally, the government proposes requiring money lenders to upload all their information, including loan data, to the credit platform "Credit Data Smart" every 30 days starting from June 1 next year, aiming to enhance information sharing and prevent the same borrower from borrowing from multiple lenders.