<div id="readability-page-1">Hong Kong’s licensed moneylenders will face strict new regulations starting in August, including debt servicing ratio caps for low-income earners and a full ban on using loan referees – a move lawmakers have said should reduce harassment by debt collectors. Lawmakers also said on Saturday that the measures outlined by the Financial Services and the Treasury Bureau would help stop most illicit loans, while one legislator called for further regulations on the moneylending industry. The bureau said in a consultation conclusions report released on Friday that the government would roll out the regulatory measures in two phases to protect the public interest. In the first phase starting on August 1, monthly repayments for borrowers earning HK$6,000 (US$766) or less would be capped at 35 per cent of their income, while those earning between HK$6,001 and HK$12,000 would face a 40 per cent limit, according to the report. Official data from the report showed that “excessive borrowing” had become “particularly acute among low-income earners” and foreign domestic helpers in Hong Kong, with some taking out massive loans just before their employment contracts ended and then disappearing. The document said this practice left employers facing harassment from debt collectors attempting to recover unpaid loans, highlighting significant vulnerabilities within the current moneylending framework. “The government is committed to further strengthening the regulation of moneylenders to protect the public interest,” a bureau spokesman said. “We are pleased to note that the community is very supportive of enhancing the regulation of moneylenders and agrees that targeted measures should be adopted to address the issue of excessive borrowing.” Under the existing system, borrowers could easily obtain unsecured personal loans because many moneylenders offered “simple and efficient approval processes” when applicants failed to seriously assess their repayment abilities, the report said. The document added that this convenience often led borrowers to take on heavy debts they could not repay, contributing to an average default rate of 9.3 per cent for the HK$47.2 billion in unsecured personal loans at the end of 2024. “As an international financial centre, it is crucial for Hong Kong to have a robust regulatory framework for financial services,” the report said. The bureau said that for the second phase beginning on June 1, 2027, all moneylenders engaged in the unsecured personal loan business would be required to submit their borrowers’ personal credit information to the Credit Data Smart platform once every 30 days. The report added that moneylenders with total unsecured personal loans reaching HK$50 million or above, or those lending to borrowers with monthly incomes below HK$12,000, must join the Credit Data Smart platform to obtain personal credit information for loan assessments. Launched in 2022, the Credit Reference Platform, which was developed to support Credit Data Smart, supports the transmission of consumer credit information in encrypted form between moneylenders and consumer credit reference agencies. It is operated by a subsidiary of Hong Kong Interbank Clearing Limited. “This will precisely address the risks associated with unsecured personal loans, whilst minimising the compliance burden on moneylenders,” the report said. “The government has all along been actively encouraging the moneylending sector to participate in the Credit Data Smart, to help lending institutions carry out detailed risk assessments before approving loan applications.” The bureau said it referenced regulatory arrangements in other jurisdictions such as Singapore, which set strict borrowing caps based on an individual’s annual income. The document detailed that non-Singaporeans earning less than S$10,000 (US$7,806) annually were restricted to a maximum loan amount of S$500 across all moneylenders, while countries such as the United Kingdom, Australia and New Zealand currently had no statutory caps for unsecured personal loans. “The government is committed to striking a balance between inclusive finance and risk management for creating a fair, transparent and sustainable moneylending market environment, thereby inducing moneylenders to grant loans more responsibly,” the report said. Lawmaker Johnny Ng Kit-chong said he expected the new rules to “effectively intercept” most illicit loans while also reducing harassment from debt collectors. But he voiced concerns that the new rules might push some domestic helpers to turn to unlicensed moneylenders, resulting in even more aggressive debt collection methods. “Regardless, the government should intensify efforts to conduct multilingual campaigns targeting the foreign domestic worker community, reminding them of the risks of borrowing recklessly,” Ng said. Hong Kong’s domestic helpers have long been targeted by predatory lending owing to their low monthly incomes. Legislator Bill Tang Ka-piu agreed that the new measures were “sufficient” to tackle loan issues related to helpers, but he added that was not the only issue that needed to be resolved. He said the government should also review the qualifications required to operate a moneylending company, and that there should be a lower interest rate ceiling for loans. “I hope the second phase can have a more concrete timetable to make more comprehensive and in-depth reform,” he said. </div>

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<p>Hong Kong will implement stricter regulations on licensed moneylenders starting August, including debt servicing ratio caps for low-income earners and a ban on loan referees to reduce harassment by debt collectors. The first phase will cap monthly repayments for borrowers earning HK$6,000 or less at 35% of their income. The second phase, starting June 2027, will require moneylenders to submit borrowers' credit information to a new platform. Lawmakers support these measures but express concerns about potential risks for domestic helpers turning to unlicensed lenders.</p>

- Hong Kong's licensed lending institutions will face new regulations starting in August, limiting debt repayment ratios for low-income borrowers and banning loan brokers to reduce creditor harassment.  
- The measures aim to curb illegal lending and enhance public protection, with a two-phase implementation plan announced.  
- The second phase, starting in June 2027, will require lenders to submit borrowers' credit information, addressing excessive borrowing risks while balancing responsible lending practices.

Hong Kong to tighten moneylending rules to tackle debt collector harassment