Employers' groups are pushing for a total ban on foreign domestic helper loans, as helpers continue to borrow beyond their means despite tighter regulations on licensed moneylenders.
The call came as the enhanced regulation, which took effect from August 1, caps repayments on unsecured personal loans at 35 percent for monthly earners of HK$6,000 or less, and 40 percent for earners of HK$6,001 to HK$12,000.
Chrystie Lam, the president of the Coalition of Global Home Service Sustainable Development, revealed on a radio program this morning that some foreign domestic helpers are bringing debt collectors to employers' doors after they cannot repay the loans.
"Fearing for their own safety, some employers lent money to their helpers themselves, only to discover the helpers had debts exceeding HK$800,000 elsewhere," Lam said. "That is unacceptable."
She further flagged a worrying "borrow or be a fool" mantra among helper chat groups, which lured helpers earning just HK$5,100 a month to take on hundreds of thousands in debt before the new rules landed.
While the new regulations ban money lenders from requesting borrowers to provide loan referees, Lam reported cases where helpers were required to hand over their residential building access cards as collateral for debt collectors to access premises.
She added that illegal borrowing is still growing online and urged the government to ban helper loans entirely and to follow up with visa reviews by the Immigration Department for helpers who deliberately break contracts.
Speaking on the same program, Daniel Wong from the Association of Financing Industry Practitioners confirmed that several helper-focused lenders have withdrawn from the market due to cost pressures after the new regulations.
He described the withdrawal as a "commercial decision," as the loan amounts have now been cut to a few tens of thousands of dollars.
However, he warned that unlicensed online lenders are charging interest far above legal limits, urging a crackdown on the illegal operators.
