Press Releases

More stringent licensing conditions to tackle money lending-related malpractices

The Government announced today (November 30) that more stringent additional licensing conditions on money lender licences will come into operation from December 1, 2016 to better protect the public from being misled by money lending-related malpractices.

"The more stringent additional licensing conditions on money lender licences will facilitate effective enforcement of the existing statutory ban on separate fee charging on borrowers by money lenders and their connected parties, ensure better protection of privacy of borrowers, enhance transparency and disclosure and promote the message of prudent borrowing," a spokesman for the Financial Services and the Treasury Bureau said. 

To address increasing public concern that deceptive tactics are being used by fraudsters who claim to be financial intermediaries for money lending (intermediaries) to induce borrowers to engage them for arranging loans with money lenders and charge very high fees under different pretexts in the process, the additional licensing conditions stipulate that money lenders must not accept a loan application referred by an intermediary if, inter alia, the intermediary:

1. charges any fees on the borrower;
2. is not its appointee registered on the Register of Money Lenders; or
3. refuses to provide a copy of the intermediary agreement to the borrower.

 "Members of the public who wish to seek a loan from a money lender should stay away from fraudsters who claim to be providing intermediary services for money lending and require the borrower to pay any fee (on whatever pretext) or hand over any money to them or any other person (whether alleged to be as deposit or guarantee money or on whatever other pretext), are not registered as having been appointed by the money lender(s) concerned on the Register of Money Lenders, or refuse to provide a copy of the intermediary agreement to the borrower. These intermediaries will not be able to help the borrowers to secure any loan from a money lender," the spokesman said. 

"The public are also reminded to verify the identity and appointment status of the intermediary by checking the Register of Money Lenders at www.cr.gov.hk/mlr, and ascertain that there is no provision for fee charging or any guarantee money in an intermediary agreement before signing any such agreement.

"We would also like to remind members of the public to take into account their ability to repay before applying for a loan, and they should also consider carefully if there is a genuine need to engage an intermediary for making the loan application," he added.

With effect from December 1, 2016, all money lenders will also be required to include the risk-warning message - "Warning: You have to repay your loans. Don't pay any intermediaries." - in all advertisements in relation to their money lending business.

The more stringent licensing conditions have been imposed on all money licences by the Licensing Court after completing the due procedures in accordance with the Money Lenders Ordinance (Cap. 163). The Registrar of Money Lenders has engaged the money lender sector to discuss the details of the additional licensing conditions and issued guidelines on their operation.

The Financial Services and the Treasury Bureau announced in April 2016 that a four-pronged approach, namely, enhanced enforcement, enhanced public education and publicity, enhanced advisory services to the public, and introduction of more stringent licensing conditions on money lender licences, would be adopted to address public concern about money lending-related malpractices. The first three measures have been implemented since the first half of 2016. To tie in with the implementation of the more stringent licensing conditions on money lender licences on December 1, 2016, the Financial Services and the Treasury Bureau has launched a publicity campaign recently to raise public awareness of the new measures and provide gentle reminders to borrowers.