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The Star
5 days ago
- Business
- The Star
Does Hong Kong loan shark law proposal lack bite needed to tame debt collectors?
A proposal to tighten regulations covering Hong Kong's notorious loan sharks is too narrowly focused and will not tackle the root of the problem of unruly debt collectors, according to lawmakers and legal experts. The legislators and specialists criticised the Financial Services and the Treasury Bureau's plan to set a cap on borrowing activity for low-income earners and impose stricter rules for loan 'referees', saying it failed to tackle the shadowy network of intermediaries who enabled predatory lending. The bureau is seeking public feedback until August over proposals to tie unsecured personal loans to a borrower's income, either through an aggregate loan cap or a debt servicing ratio. It has also floated the idea of banning the use of referees altogether to stop the widespread harassment of third parties. 'Harassment is against the law, but harassment happens every day,' lawmaker Michael Tien Puk-sun said. 'People wonder if there is lawlessness in Hong Kong.' At a Legislative Council meeting on Monday, the government said the Companies Registry had received 725 complaints about moneylenders in the past five years. Referrals to police were made in 509 of the cases, which authorities said showed the need for tougher regulation. Last year, the registry received 214 complaints, conducted 561 inspections and issued 22 warning letters. These included 58 complaints involving domestic helpers, of which 18 directly concerned moneylenders harassing loan referees. The names of referees are generally provided by a borrower to lenders when taking out a loan. Legally, a referee cannot be held liable for a loan and must provide written consent to be listed. But in practice, debt collectors are known to hound them to put pressure on the actual debtor. Tien called for a system where bad debt collection behaviour caused moneylenders to have their licences suspended, also suggesting authorities create a blacklist of domestic helpers who had a history of borrowing irresponsibly. Legislator Bill Tang Ka-piu, who has followed the issue for years, said the consultation paper was too focused on domestic helpers. 'The consultation paper's content only deals with the problem of domestic helper loans, but it does not deal with the problem of financial intermediaries, which is also very serious and has not been properly addressed,' he said. Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said the government had to manage a 'balancing act' between risk and financial inclusion. Hui acknowledged the problem of 'information asymmetry', in which lenders had little information on borrowers' financial details, such as their existing debts. He said the government was encouraging all lenders to join the Credit Data Smart platform, which provided consumer credit references, to get a better picture of borrowers' debts. But Hui conceded that mandating its use for all players posed a challenge due to operating costs, particularly for smaller lenders. Tang said Hong Kong was too 'lax and liberal' in regulating debt collection, which created a 'vicious cycle' where lenders granted high-risk loans because they knew they could use aggressive tactics to force borrowers to pay the money back. The offering of high-risk loans involves licensed lenders disbursing a loan on paper, with agents immediately clawing back a large cash 'commission' of 15 to 30 per cent. This illicit fee, when factored in, sends the effective interest rate soaring far beyond the legal 48 per cent cap, but allows the lender to maintain a facade of legality. 'The intermediary just allows the finance company to evade legal responsibility,' Tang said. 'This is the loophole that allows the old [loan shark] tactic to happen. It should be strictly cracked down on.' Bobby Tan* and his wife Alicia* are among those who have found themselves being hit with hefty interest rates through underhanded tactics. Tan, who was unfamiliar with loan sharks and how their intermediaries worked, borrowed HK$5.05 million (US$643,290) from 30 licensed small lenders, obtained only HK$4.15 million after deducting commissions and expenses, and had to pay an effective rate of 1,031 per cent. The Money Lenders Ordinance puts a ceiling on interest rates at 48 per cent. Lawyer Lau Kar-wah, who has represented dozens of victims, called for lowering the ceiling to 36 per cent. Lau also suggested requiring licensed lenders to hold a minimum capital of HK$10 million to prevent them from being shell companies that simply declared bankruptcy when sued. 'Why can a finance company be established with just two dollars, but a bank cannot?' Lau said. 'If they have HK$10 million or HK$20 million in assets, they won't dare to act so recklessly.' Jason Chan, convenor at the Association of Financing Industry Practitioners, urged Hong Kong to learn from Singapore's practice of blocking the IP addresses of non-local lenders that targeted residents. The city state has only 153 licensed moneylenders, just 7.5 per cent of Hong Kong's 2,048 in May. Under its Moneylenders Act, Singapore imposes hard, income-based caps on how much an individual can borrow and makes it mandatory for all lenders to use a central credit bureau. Its Debt Collection Act 2022 requires all individual collectors to be licensed, and the Protection from Harassment Act makes it a criminal offence to contact debtors outside stipulated hours or to engage in public shaming. 'In Singapore, creditors and lenders cannot call beyond a stipulated time – that's a crime,' Tan added. 'But in Hong Kong, it appears it's a cowboy town. They can call and torment borrowers until they are happy.' - SOUTH CHINA MORNING POST
South China Morning Post
08-07-2025
- Business
- South China Morning Post
Does Hong Kong's loan shark law proposal lack bite needed to tame debt collectors?
A proposal to tighten regulations over Hong Kong's notorious loan sharks is too narrowly focused and will not tackle the root problem of unruly debt collectors, according to lawmakers and legal experts. Advertisement The legislators and specialists criticised the Financial Services and the Treasury Bureau's plan to set a cap on borrowing activity for low-income earners and impose stricter rules for loan 'referees', saying it failed to tackle the shadowy network of intermediaries who enabled predatory lending. The bureau is seeking public feedback between June and August over proposals to tie unsecured personal loans to a borrower's income, either through an aggregate loan cap or a debt servicing ratio. It has also floated the idea of banning the use of referees altogether to stop the widespread harassment of third parties. 'Harassment is against the law, but harassment happens every day,' lawmaker Michael Tien Puk-sun said. 'People wonder if there is lawlessness in Hong Kong.' At a Legislative Council meeting on Monday, the government said that the Companies Registry had received 725 complaints about money lenders in the past five years. Referrals to police were made in 509 of the cases, which authorities said showed the need for tougher regulation. Advertisement Last year, the registry received 214 complaints, conducted 561 inspections and issued 22 warning letters. These included 58 complaints involving domestic helpers, of which 18 directly concerned moneylenders harassing loan referees.
HKFP
24-04-2025
- Business
- HKFP
Increase in Hong Kong airport departure tax could hurt city's competitiveness, lawmaker says
An increase in Hong Kong's airport departure tax could hurt the city's competitiveness, a lawmaker has said, after the government doubled down on plans to increase the levy from HK$120 to HK$200 despite criticism. Lawmaker Lo Wai-kwok said on a Commercial Radio programme on Thursday that amid competition from other destinations such as the Greater Bay Area, Singapore and Thailand, a tax hike could deter short-haul travellers. 'We must consider how this affects our position against neighbouring hubs,' Lo said in Cantonese. His comments came after the Financial Services and the Treasury Bureau defended the tax increase in a letter to Legislative Council members on Wednesday, saying the impact of the hike would be 'minimal.' The bureau said that taking into account the per capita spending of tourists – except those from mainland China – and excluding the cost of air tickets, the proposed increase of HK$80 accounts for around 1 per cent of the overall travelling cost. 'The proposed increase of [the airport departure tax] should not provide a strong incentive for travellers to switch to other airports for travelling,' the bureau wrote. Lawmaker Perry Yiu, who represents the tourism sector, said in a Facebook post on Wednesday that he was 'disappointed' by the authorities' response. 'While [I] understand that the SAR government is doing its best to increase its reserves and address the deficit, the letter did not respond to my and the sector's concerns,' he wrote. He added that the airport's traffic had only recovered to 74 per cent compared with 2019 levels, while neighbouring aviation hubs' recovery rates were at least 90 per cent. Deepening deficit Financial Secretary Paul Chan first announced the plan to increase the airport departure tax during the budget address in February as one of several measures to boost the city's reserves amid a deepening deficit. The hike – planned to come into effect on October 1 – would bring an estimated HK$1.6 billion in revenue annually, Chan said. Hong Kong logged an estimated HK$87.2 billion deficit in the 2024/25 financial year, a result attributed to a drop in land sales. In the Wednesday letter, the government said it had been in contact with the Airport Authority and major airlines to gather their views on the proposed increase. 'We consider the current rate of increase reasonable and therefore have no intention to adjust it, nor will we increase [airport departure tax] in phases or defer the increase,' the government wrote. It added that, compared with other measures to increase government revenue, such as salaries and profits tax, raising the airport departure tax would only affect air passengers. Hong Kong's status as an aviation hub took a major hit during the Covid-19 pandemic, when strict testing rules and mandatory quarantine periods in place for over three years led airlines to cut their routes to and from the city. Airport traffic figures have struggled to recover since. In 2024, the city saw 53.1 million passengers, down from 71.5 million in 2019.
South China Morning Post
08-04-2025
- Business
- South China Morning Post
Hong Kong considers additional tax exemptions for air transit travellers
The Hong Kong government has proposed providing more exemptions for transit travellers as lawmakers voiced concerns that raising the air passenger departure tax could divert visitors to neighbouring competitors. Advertisement Andrew Lai Chi-wah, permanent secretary for the Financial Services and the Treasury Bureau, said on Wednesday that a further relaxation of the air passenger departure tax will be considered, including extending the exemption to travellers leaving the next day. 'Other international airports have a 24-hour exemption, and our arrangement can be more liberal than that,' Lai said during a Legislative Council meeting. 'So if you arrive shortly after midnight and the flight is on the next day, it means you can stay for longer, almost 48 hours without paying the tax.' Starting October 1, the city will increase the air departure tax from HK$120 (US$15.40) to HK$200 per passenger, projected to generate HK$1.6 billion per year in government revenue. Advertisement The measure, announced by Financial Secretary Paul Chan Mo-po in his latest budget speech in February, is part of efforts to deal with the government's deficit of about HK$87.2 billion for the 2024-25 financial year. The government said in March that certain groups were exempt from paying the tax, including those under 12 years old, direct transit and connecting flight passengers, as well as those arriving and departing Hong Kong by aircraft on the same day.
South China Morning Post
04-04-2025
- Business
- South China Morning Post
Number of deals involving non-local homebuyers in Hong Kong more than triples
The number of deals involving non-local homebuyers in Hong Kong has more than tripled over the past two years, official data shows, a jump that experts have attributed in part to the government's scrapping of property market cooling measures. Advertisement But the number of transactions by local buyers increased by only 14 per cent between 2023-24 and 2024-25, with the latest level down by 34 per cent over the figure for 2020-21, when the Covid-19 pandemic started to hit the city. The shifting make-up of homebuyers was spelled out in figures the Financial Services and the Treasury Bureau provided to the Legislative Council's Finance Committee on Thursday. Non-locals took part in 2,997 residential property deals in 2024-25, involving HK$31.3 billion (US$4.02 billion) in total. They took part in 700 deals in 2023-24, with HK$6.78 billion in property changing hands. In 2020-21, buyers from outside the city were involved in just 110 residential property deals. The bureau defines non-local buyers as those without any form of Hong Kong identity card. Advertisement The treasury's figures also showed that the number of deals by Hongkongers in the past financial year rose to 48,458 from 42,475 in 2023-24, which was still far behind the 72,909 transactions recorded in 2020-21.
