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Following is a question by the Hon Albert Chan and a written reply by the Secretary for Security, Mr Ambrose S K Lee, in the Legislative Council today (February 4):

Question:

In reply to my question on June 19, 2002, the Administration said that some measures had been taken to monitor the tactics used by debt-collection agencies for recovering debts. However, I am still receiving many complaints from members of the public alleging that they have been seriously distressed by the tactics used by debt-collection agencies, to the extent that they have even contemplated committing suicide out of frustration. While it is legal for banks to hire debt-collection agencies or take legal actions to recover debts, such actions have put debtors under immense psychological pressure. In this connection, will the Government inform this Council:

(a) of the number of cases reported to the Police over the past 15 months about debt-collection agencies' harassment;

(b) of the progress of the study conducted by the Law Reform Commission on the making of laws to regulate the activities and debt recovery practices of debt-collection agencies; and

(c) whether it will consider stepping up enforcement to curb the harassing practices of debt-collection agencies; if so, of the details; if not, the reasons for that?

Reply:

Madam President,

(a) From October 2002 to December 2003, there were 2,242 reports of criminal cases in relation to debt collection activities, such as criminal damage, intimidation and wounding, etc; and 22,532 reports of non-criminal behaviour in relation to debt collection activities, such as telephone nuisance and issuance of numerous dunning letters.

(b) The Law Reform Commission (LRC) published its report on "The Regulation of Debt Collection Practices" in July 2002. The report's recommendations include the creation of a criminal offence of harassment of debtors and others, and the introduction of a licensing system for debt collection agencies and individual debt collectors. Relevant bureaux and departments, including Security Bureau, Financial Services and the Treasury Bureau, Hong Kong Monetary Authority and the Police are studying the recommendations.

(c) The Administration is mindful of the public's concern over abusive debt collection practices. The Administration will continue to enforce existing laws to combat illegal practices employed by debt collection agencies. Such laws cover, inter alia, offences of intimidation, assaults with intent to cause certain acts to be done or omitted, destroying or damaging property and threats to destroy or damage property under the Crimes Ordinance; blackmail under the Thefts Ordinance; sending letters threatening to murder and forcible taking or detention of persons under the Offences Against the Person Ordinance.

In addition, since 2000, the Police have streamlined their procedures in handling reports of harassment relating to debt collection agencies. In the past, depending on the scale and nature of the cases, these reports might be handled by uniformed branch officers or crime investigation officers. Under the streamlined procedures, all such reports go directly to crime investigation officers in the first instance.

The Hong Kong Monetary Authority (HKMA) is also aware of the public's concern over possible malpractices of authorised institutions (AIs) in the course of recovering debts. The Code of Banking Practice (the Code), which is issued by the industry associations, specifies that AIs should prohibit debt collection agencies from collecting debts by harassment or other improper means. The Code also requires AIs to put in place suitable systems and procedures to monitor the performance of these agencies. AIs should consider terminating their relationship with an agency if they become aware of unacceptable practices or breaches of contractual undertakings by that agency.

The HKMA will monitor AIs' compliance with the Code as part of its regular supervision. Since March 2002, all AIs are required to submit a quarterly return on the number of complaints received against the debt collection agencies that they employ. The objective of the survey is to encourage AIs to tighten up their monitoring of debt collection agencies to ensure that they comply with the Code. Since the introduction of the survey, the number of debt collection agencies-related complaints in relation to AIs has been decreasing, indicating that AIs have strengthened their supervision over debt-collection agencies' conduct.

Ends/Wednesday, February 4, 2004

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