Strengthen Regulation of Licensed Moneylenders, Phase 1 Measures to Roll Out by August at Earliest

The Financial Services and the Treasury Bureau announced a summary of consultations and specific measures to strengthen regulation of licensed money lenders to address over-indebtedness. The measures will be implemented in two phases.

The first phase of measures, as outlined in the consultation summary, mainly includes setting a cap on the “repayment-to-income ratio” for unsecured personal loans to low-income individuals, prohibiting lenders from requiring borrowers to provide loan counseling, and requiring lenders to include risk warning statements specified by the Companies Registry in their loan advertisements. These measures will be implemented in August this year.

The second phase of measures relates to the “Credit Information System” (“CIS”). It requires all lenders engaged in unsecured personal loans to provide personal credit data of their unsecured personal loan borrowers to the CIS every 30 days; and mandates that lenders with total unsecured personal loans of HKD 50 million or more, as well as lenders involved in loans where monthly income of borrowers is below HKD 12,000, must join the CIS to access borrowers’ personal credit information. These measures will be implemented in June next year.

The Treasury Bureau and the Companies Registry are drafting amendments to the licensing conditions and administrative guidelines for lenders, and have discussed phased updates to existing licenses with the judiciary to align with the implementation schedule of the measures.

To strengthen regulation of lenders, the Treasury Bureau conducted a public consultation from June to August last year, gathering a total of 150 submissions from various sectors of society. A spokesperson for the bureau stated that the government is committed to further enhancing lender regulation to protect citizens’ rights. The community widely supports the strengthening of regulation, recognizing the need for targeted measures to address over-indebtedness. Respondents generally supported the main measures proposed in the consultation document and provided valuable feedback on specific details. The bureau will brief the Legislative Council’s Finance Committee next month on the consultation summary and details of the measures.