HK unveils plan to put cap on helper loans

 

The plan is to base the loan on the helper's monthly income 

The Hong Kong government said it plans to open a public consultation early next year on limiting the amount of money that foreign domestic helpers are allowed to borrow.

The plan is to base the amount on the monthly income of loan applicants, said Secretary for Labour and Welfare Chris Chan, in a written response to legislator Chan Han-pan on Tuesday.

“To step up efforts in addressing the over-borrowing issue of certain groups such as FDHs and young people, the Government is reviewing the existing regulations on money lenders, including exploring to set a borrowing cap on unsecured personal loans based on the monthly income of intending borrowers, alongside enhancing publicity and education,” said Chan.

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The government is now formulating measures in line with this plan, and will announce the details of the public consultation “in due course,” he added.

His statement came on the day the police disclose the raids on two mobile phone companies and a money lender who were suspected of  illegal lending activities and money laundering. The rates imposed on their mostly domestic-worker customers reportedly ranged between 400% to 3,000%.

In the past, Sun said the government would remind helpers through publicity and other promotion efforts to “exercise financial prudence and avoid borrowing from finance companies.”

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At the same time, it has been continuously taking and enhancing measures to regulate the business practices of money lenders.

But the effort does not seem to be having much impact lately, when even employers have been subjected to harassment by collectors for lending companies.

From a total of four such cases reported in 2023 and none in 2022, there have been 9 in the first 10 months of the year already, according to statistics he provided to legislators.

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The outstanding debt in these cases was mostly not provided, but those that were, reportedly  ranged between $1,000 to $16,800.

On the question of whether FDHs should be stopped from using their employers’ addresses when applying for loans, Sun said an employer who finds out that his/her residential address was used improperly should contact the money lender concerned and demand that the improper debt collection be stopped.

As to individuals used as loan referees, Sun said their written consent should be provided along with the loan agreement. If no such written consent is provided, the money lender should refrain from contacting the referee.

But even if consent is acquired, that role as a referee ends when the loan is granted, said Sun. In other words, the referee should not be harassed or contacted even if the debtor reneged on the promise to repay on time.

On the so-called issue of job-hopping, Sun said there has been a significant decline in the number of FDHs found to have engaged in the practice of changing employers on a whim.

Of the 1,557 FDH applications referred to Immigration’s special duties team for follow-up due to suspected “job hopping” in 2023, 502 were eventually rejected.

The resulting number of just over 1,000 “job hoppers” was notably lower than the 5,844 recorded in 2020 and 2,833 in 2021, he added  

Sun said the situation has significantly improved after the passing of the revised Code of Practice for Employment Agencies in May.

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