Hongkongers have lost millions to loan scams, yet the government is still dragging its feet on tighter regulation
Alice Mak says with phone and money-lending fraud seemingly on the rise, Hong Kong’s reputation as a leading financial centre is in jeopardy unless the government tightens loopholes
Hong Kong has seen a surge of phone and moneylending scams of late. The recent arrests by authorities overseas have only highlighted the scale of the problem and how far things have escalated. We must act before a rotten apple spoils the barrel.
These rotten apples, who fancifully called themselves “financial consultants”, run loan scams with others who pretend to be bank representatives. They convince victims to borrow money at high interest rates using forged documents, before collecting a hefty “consultant’s fee”.
In one of the worst cases that I have dealt with, the victim borrowed a total of HK$3 million and was charged a combined “fee” of almost HK$2 million, while never actually receiving any money. Many victims have become debt-ridden, have been threatened and intimidated by these “consultants”, and in despair, some have ended up selling their homes to pay their debts. In the past year alone, my office has received a total of 153 complaints, which involved a staggering HK$150 million – and that is just the tip of the iceberg.
It is obvious that these criminals are not running a legitimate business but a systematic scam, and yet our current regulations and Money Lenders Ordinance are powerless to bring them to justice. The ordinance only supervises moneylenders, not intermediaries, or these “financial consultants”. The moneylender registry system lacks entry barriers and is so loose that virtually anyone can become a moneylender.
The proliferation of bogus lenders has hit the integrity of the entire moneylending industry, and created potential loopholes for criminals to exploit in relation to money laundering. Legislators from all political parties have agreed that the current ordinance and related regulations must be reviewed and strengthened to stamp out this practice. Yet, even with so many victims, the Financial Services and the Treasury Bureau has been slow to act.
After many inquiries, the bureau is finally listening and officials say they will consider reviewing regulations in the future. This cannot come soon enough.
Hong Kong has long prided itself on being a global financial centre with a strong rule of law. It is perplexing as to why the government is showing no sense of urgency in reforming regulations and addressing loopholes. In comparison, London has taken the initiative to regulate the moneylending and consulting industry, to preserve its financial system’s integrity and retain consumers’ trust.
The future of our finance industry is in peril if our government continues to look aside.
Alice Mak Mei-kuen is a lawmaker from the Federation of Trade Unions