Money lending needs a single regulator
- Loose oversight and failure to modernise the 40-year-old licensing regime means many companies impose exceedingly harsh terms on borrowings
Many Hongkongers are familiar with the expression, “To borrow or not to borrow? Borrow only when you can repay!” Thanks to the requirement of such a message in moneylending advertising, responsible borrowing is not an alien concept to the public.
But how many actually think twice before turning to money lenders is another matter. Credit goes to the Consumer Council for giving the government a much-needed push to overhaul the industry.
From licensing to advertising, there exists a wealth of problems that warrant improvements. According to the watchdog, the number of licensed money lenders surged from 779 in 2009 to 2,260 this August, with the total amount of credit card advances and personal loans close to HK$674 billion.
Meanwhile, the number of cases of people with multiple bankruptcies soared from 151 in 2013 to 617 last year, even though bankruptcies showed a general decrease from 9,371 to 7,146 over the past five years.
The surge in licensees owes much to the low threshold for an application. Unlike some countries where money lending is regulated by a single authority with well-established rules, licensing and enforcement in Hong Kong currently come under the Company Registry, the police and the Licensing Court. Loose oversight and failure to modernise the 40-year-old licensing regime means many companies impose exceedingly harsh terms on borrowings.