Letters from leaders of Hong Kong's political parties and government departments.
Today, moneylenders in Hong Kong are very common. Borrowing money from finance companies are never easier – provide basic personal information, then a few clicks and money is in your hand. While it might have brought convenience to our lives, perhaps it has a less positive impact on our spending behavior. Many citizens borrow money just for short-term indulgence, and it’s almost as if you don’t need to pay it off! Eventually, many were dragged into a financial “black-hole”, causing them to bear a huge financial burden.
According to a recent survey by DAB, nearly 20% of the interviewees or their family have experiences of borrowing money from finance companies. Many interviewees feel that there is a lack of regulation in the way they conduct their businesses. 73% of the interviewees believes that finance companies’ over-the-top advertisements have promoted over-consumption. Over two-thirds of interviewees also expressed concerns for the Money Lenders Ordinance’s ineffective regulation. For example, finance companies are not required to conduct background-checks before lending out money, and the upper limit for interest rate charged is 60%, which is way too high. What worries me the most are these finance companies’ influence on our citizens, particularly our younger generation. As they are highly exposed to the different medias, whether from television or from the internet, they might get a false impression from these finance companies that borrowing money is just a norm in the society, and where they “conveniently” failed to mention the risks and dangers behind borrowing money.
In fact, there are plenty of victims that fell into this trap. I have received plenty of tragic cases in the past and many are still on-going. For example, there are many online groups that target adolescents and trick them into borrowing huge sum of money from scammers. These young people were led to believe that it will yield them high return, only to discover they had been scammed. Fake recruiting companies are very common. These scammers pretend to employ the victims, but only under the condition that they borrow money from their associate moneylenders first. Many also forced victims into signing a disclaimer that they did it “voluntarily” in order to prevent legal actions afterwards. In one case, a victim was forced to borrow tens of thousands of dollars from each of 6 finance companies with interest rate of over 40% in the name of applying for a job. How do you expect young people, without much working experience or even a job, to pay off their hundreds of thousands of dollars of debts? It causes huge pressure both financially and psychologically for them, thus severely affecting their daily life. Since some victims also gave up their personal information, they even faced real life threats to themselves (or worse, to their families). Some moneylenders even hire criminals to harass them at workplaces or their home.
These cases often anger me, and it is time to put a stop to these behaviors by tightening up our increasingly outdated《Money Lenders Ordinance》. It was established in the 80s to target usury, but evidently the problem today is the finance companies, which the ordinance is less effective on. For one, many finance companies are charging over 30% interest rate at a minimum, yet somehow that is legal under the current ordinance. This is utterly unacceptable in today’s standard.
Furthermore, the monitoring system of these finance companies must be looked at. Right now, banks are under tight regulation from the Monetary Authority, and there are a lot more restrictions on lending out money. For example, there are requirements for background checks and stress tests for borrowers. Meanwhile, our Police force monitors these finance companies, and thus it enjoys a lot more flexibility and freedom in lending out money as compared to the banks. While we do not want to interfere with their daily operation, there should be a new set of rules, or even a new licensing system that is specifically set to regulate finance companies in its unique position, while unifying the responsibility of overseeing money-lending to the Monetary Authority.
Another thing the government needs to do is to regulate the adverts of finance companies. While there is a reminder of after adverts from public media (You have to repay your loans. Don't pay any intermediaries/借錢梗要還，咪畀錢中介), it is ineffective in discouraging over-consumption or “rob Peter to pay Paul” (債冚債) – There should be further reminders after adverts and limit the content of such advertisements. The government should also accelerate the progress of expanding the scope of “Do-not-call Registers”, thus restricting the channels of communication of finance companies towards citizens. Promoting the use of the online database of all legitimate moneylenders and their respective agencies is also helpful for citizens to identify reputable and suitable moneylenders for them should they need to borrow money.
Of course, regulation only goes so far in stopping the shady activities of some of the finance companies. Ultimately, it is us who will decide if we need to borrow money or not. Instead of borrowing money, why not change our own lifestyle? Do our desire equates our needs? Is what we want really necessary for us? Reducing over-consumption in our daily lives goes a long way in reducing our need for money. Of course there might be occasions when we are desperate, but one should only borrow from respected and trusted moneylenders or regular banks, and limit the amount borrowed to a minimum. Borrowing money should be a last resort for most citizens and should not be over-used.
Borrowing money is not as simple as pressing a button – there are serious consequences. Citizens should think carefully of what their needs are and evaluate whether they really need to borrow money. Citizens – especially young people – should also be extra careful towards scammers appearing in different medias and the internet. There is no such thing as “free lunches”.