Firms allegedly bypass debt rules to lend to helpers via credit cards

Hong Kong has tightened its regulation of licensed money lenders in August, including new safeguards aimed at curbing excessive borrowing by low-income earners. But concern is growing that some finance companies may be circumventing the rules by offering credit cards and other forms of credit to foreign domestic helpers. The Financial Services and the Treasury Bureau says it will closely monitor the implementation of their latest measures and ensure the money-lending industry follows regulation.

"Ms. Chan" here has employed a foreign domestic helper. She says she terminated the contract right after discovering her helper has been borrowing money through credit-card cash advances.

She says if the helper doesn't repay the balance within the interest-free period, interest accrues day by day. The debt can snowball quickly from 20,000 dollars to 40,000 dollars. The government stepped up regulatory measures in August, restricting low-income earners and foreign domestic helpers from getting unsecured personal loans and barring licensed money lenders from requesting loan referees.

The convenor of the Association of Financing Industry Practitioners Jason Chan says credit card operations and banking services may fall outside the regulatory framework governing licensed money lenders. This means some companies can continue issuing credit cards to helpers. He adds some money lenders would set up new entities overseas to sidestep tighter controls.

A foreign domestic helper employment agency says some of these overseas firms approach the helpers directly to solicit loans -- with some allegedly used deceptive tactics. The Financial Services and the Treasury Bureau reminds anyone carrying on a money lending business without a license or operating in breach of licensing condition is committing an offence.