Firm Resolve to Address the Root Cause of Excessive Borrowing by Strengthening Regulation of Money Lenders

The Government is determined to further enhance the regulation of money lenders to safeguard public interest.  We are currently conducting a public consultation exercise on this subject and would like to invite all sectors of the community to share their views, so that we can harness collective wisdom and insights when devising targeted measures to address the issue of excessive borrowing.


Hong Kong’s money lending market has seen rapid development in recent years.  By offering quick and simple loan approval processes, money lenders have made borrowing very convenient.  However, there are borrowers, particularly low-income earners, who fail to fully assess their repayment ability and borrow excessively, bringing undesirable consequences to themselves, their families, and society as a whole.  The Government, therefore, proposes taking appropriate measures to further strengthen the regulation of money lenders while ensuring that members of the public can benefit from financial inclusion.

In the light of the problems identified in the money lending market, we propose the following six key measures in a bid to tackle the root cause of the issue.  Many of the details and specific regulatory options are yet to be finalised.  We would like to know how you think before we come to a decision.

I.        Enhancing regulation of unsecured personal loans

We propose enhancing the regulation of unsecured personal loans granted by money lenders and seek public views on two proposed options, i.e. Options A and B.  Under the two options, an aggregate loan cap or a debt servicing ratio cap is set based on the borrower’s monthly income as follows:

In addition, as there were cases where borrowers took out big loans from money lenders towards the end of their employment contracts and then disappeared, we propose that when money lenders grant unsecured personal loans, the repayment periods shall not be longer than the remaining term of the borrowers’ employment contracts.

II.      Strengthening protection of public interest

Currently, borrowers may provide loan referees when they apply for loans.  The role of a referee is confined to the provision of information about an intending borrower in respect of a loan application.  Under no circumstances is a referee liable for repayment of a loan.  To address the situation where employers are harassed for the loans taken out by their foreign domestic helpers (FDHs), we propose three feasible options as follows:

• After receiving the loan referee’s written consent for a loan application, the money lender is required to proactively send a letter to the referee to verify its authenticity;

• Loan referees must sign their written consents in person, at the premises where money lenders carry on their business; or

• Money lenders are prohibited from requesting borrowers to provide loan referees when they apply for unsecured personal loans.
  
  
  

III.     Optimising and enhancing borrower affordability assessment

The Government has been encouraging the money lending sector to actively participate in Credit Data Smart (CDS), which helps lending institutions conduct detailed risk assessments before approving loan applications.  To further improve the integrity of personal credit information of CDS, we propose requiring all money lenders to regularly submit personal credit information of their borrowers to CDS.  We also propose requiring money lenders with a certain scale of unsecured personal loan business to join CDS to obtain the personal credit reports of borrowers.

IV.     Enhancing the complaint handling process

The Companies Registry (CR) has been paying close attention to the overall regulation of the money lending sector and money lenders’ compliance with the licensing conditions.  To better protect public interest, the CR will increase the transparency of its process of handling complaints about money lenders’ non-compliance and explore means to strengthen the monitoring of the complaint handling system and procedures adopted by money lenders.

V.       Stepping up promotional and educational efforts

We will step up promotional and educational efforts targeting the FDH community, the youth and low-income earners to enhance their understanding of money borrowing and promote the importance of prudent borrowing.  We will focus on reminding FDHs that they should not, without their employer’s consent, provide money lenders with the name of their employer as loan referee or use their employer’s address as the borrower’s contact address.  We will also place great emphasis on promoting prudent financial management among young people and low-income earners, reminding them to consider, before borrowing, the necessity of taking out a loan and their repayment ability, so as to minimise impulsive borrowing.

VI.      Enhancing the regulatory regime for money lenders

To further strengthen the regulation of money lenders, we propose to enhance the prevailing regulatory regime, including the licensing mechanism and the Money Lenders Ordinance.  We also propose to publish details of money lenders with records of repeated non-compliance on the Government’s website to increase deterrence and transparency.

Conclusion

A robust financial services regulatory system is crucial to Hong Kong as an international financial centre.  The Government is committed to striking a balance between financial inclusion and risk management, with a view to establishing a fair, transparent and sustainable lending market environment that encourages lenders to grant loans in a more responsible manner.

Since the launch of the consultation exercise, we have been meeting with the money lending sector, professional bodies and non-governmental organisations to explain the details of the proposed measures and listen to their views and suggestions.  Upon conclusion of the exercise, we will consolidate and summarise the views received, finalise the relevant measures and promptly draw up the relevant legislative proposals, reinforcing our efforts to address the issue of excessive borrowing.

The consultation period will end in two weeks on 22 August.  We look forward to receiving your valuable feedback and working together to create a healthier and more responsible money lending environment!

Here is the link to the consultation paper:

https://www.fstb.gov.hk/fsb/en/publication/consult/consult-moneyLendersRegulation.html

7 August 2025