Licensing crackdown to keep money lenders honest and expose unscrupulous practices
Government seeks to stamp out double-fee charging and undisclosed intermediaries
In an effort to clamp down on unscrupulous money lenders and weed out undisclosed intermediaries, the government will from next month introduce stricter licensing conditions to ensure transparency and fairer fee charging.
From December 1, all money lenders will be required to disclose whether an intermediary was involved in the transaction. Lenders will also be required to notify authorities if they do appoint an intermediary, with that record to be released publicly.
Records will be available through the Companies Registry website.
Lenders will be required to retain records in either written, video or audio format to prove borrowers were adequately explained the terms and conditions of the loan agreement.
The statutory framework seeks to eliminate double-fee charging from both parties, a practice that has long been illegal, but remains common. It follows an increasing number of consumer complaints regarding money lenders that allegedly concealed their relationship with intermediaries in order to offload liability and evade prosecution.
Announcing the measures on Wednesday, deputy secretary for Financial Services and the Treasury Partick Ho Chung-kei said despite existing legislation being in place, desperate borrowers were still falling prey to illegal practices, such as the charging of consultation fees or exorbitant interest rates.
“Some intermediaries did not even intend to provide the loans in the first place – after helping borrowers with the application they disappeared together with the loaned money,” he added.
The Licensing Court has imposed the additional conditions in the Money Lenders Ordinance, taking effect on Thursday.
The government, with the Investor Education Centre and the Consumer Council will roll out public education programmes aimed at increasing public awareness of the potential risks.