LCQ14: Preventing and combating improper debt collection practices
I have recently learnt that there is a worsening trend of debtors being harassed by debt collection activities, and it is still very common for banks, finance companies, telecommunications service companies, beauty service companies and tutorial teachers to hire debt collection agencies (DCAs) to recover the debts owed by their customers. In this connection, will the Government inform this Council:
(1) of the number of reports received, between April 1, 2016 and March 31, 2017, by the Police from members of the public about the harassment caused by DCAs' debt collection practices;
(2) whether it will consider afresh accepting the recommendations in the report of the Law Reform Commission of Hong Kong on "The Regulation of Debt Collection Practices" published in 2002 that a criminal offence of harassment of debtors and others should be created, and that a statutory licensing system to regulate DCAs should be established; if so, of the details; if not, the reasons for that; and
(3) whether it will consider introducing new law enforcement measures to curb the DCAs' adopting harassing practices for recovering debts; if so, of the details; if not, the reasons for that?
The Government has always been concerned about the nuisance of improper debt collection practices to the public, and has adopted a multi-pronged approach through measures like stepping up enforcement and close monitoring of debt collection practices of the sector concerned by various regulatory authorities, as a means to actively prevent and combat such practices. My reply to the three parts of the Hon Chan Chi-chuen's question, upon consultation with the Financial Services and Treasury Bureau, is set out below.
(1) In 2016, the Police received 1 852 crime reports relating to debt collection (such as intimidation, blackmail, criminal damage, etc.). In the first three months this year, the Police received a total of 438 related reports, a rise of 7.4 per cent compared to 408 cases in the same period last year. The majority of these cases concerns criminal damage.
Regarding non-crime harassment (such as harassment by telephone calls, harassment by visits, etc.), the Police received a total of 9 723 related reports last year. In the first three months this year, there were 2 287 such reports, a drop of 2.4 per cent compared to 2 344 cases in the same period last year.
(2) In September 2005, the Security Bureau, upon thorough consideration, gave a detailed response to the Law Reform Commission's report (the LRC's report) on "The Regulation of Debt Collection Practices" issued in 2002. With regard to the recommendation to enact a new criminal offence provision to regulate such practices, the Government considers that there are various prevailing legal provisions, including the Crimes Ordinance (Cap 200), Theft Ordinance (Cap 210), Offences Against the Person Ordinance (Cap 212), Summary Offences Ordinance (Cap 228), Societies Ordinance (Cap 151) and Post Office Ordinance (Cap 98), to specifically guard against different kinds of illegal debt collection practices, such as splashing paint, jamming of door locks with glue, mailing of letters with threatening statements or "paper money for the dead", threatening by visits, etc. The Government is of the view that there is no need to introduce new criminal offence provisions with respect to the operation of debt collection agencies (DCAs).
Meanwhile, the LRC's report also recommended a licensing scheme to regulate the debt collection industry. Based on the operational experience of the law enforcement agencies, we consider that delinquent debt collection operators, in particular those run by triads, are unlikely to come forward for licensing in the first instance. The system would likely only cover prudent and ethical market operators, who would not engage in abusive activities even in the absence of a licensing regime. In this regard, introducing a licensing scheme will fall short to prevent undesirable elements from engaging in debt collection.
The Police will continue to enforce the law in a stringent manner, and will launch investigations into and press charges against any crime-related debt collection practices. As for other non-crime but improper debt collection cases, the Police will, depending on the industry involved, continue to co-ordinate their efforts with relevant regulatory authorities (e.g. if the case concerned involves banks, the Police will handle the case in co-ordination with the Hong Kong Monetary Authority).
(3) The Police attach great importance to combating illegal debt collection activities, and continuously adopt pro-active measures to enhance the effectiveness of their enforcement actions. Apart from setting up a dedicated team to closely monitor the trend of improper debt collection practices in various districts, and formulating comprehensive preventive and operational strategies in the light of specific circumstances, the Police will continue to step up patrol and co-operate with property management companies in respective districts through distribution of leaflets at residential buildings and request for assistance from management companies of public housing estates and private residential estates, in a bid to prevent loansharking syndicates from launching promotion or displaying advertisements in housing estates or within the building areas, so as to thwart DCAs' illegal or improper debt collection activities therein. Meanwhile, the Police will continue to disseminate messages against improper debt collection practices through the media and publicise successful enforcement and prosecution actions as deterrence.
In handling individual cases, the Police will refer cases involving criminal elements (such as criminal damage or intimidation) to dedicated criminal investigation teams for investigation. By doing so, the Police can pool together experience and expertise for investigation and evidence gathering, as well as institute criminal prosecution in accordance with the law.
In dealing with reports not involving criminal offences at the moment, the Police will, having regard to the circumstances of individual cases, assess whether there is any possibility that such debt collection practices may turn into criminal offences, and will then classify such cases as "high threat" or "low threat" cases. Every "high threat" case will be referred to the criminal investigation teams for follow-up. For "low threat" cases, the Police will monitor their developments. If there are signs that the seriousness of the case has heightened, the criminal investigation teams will take over the investigation.
If a DCA employed by an institution is suspected to have used improper or illegal means in its debt collection, the Police will co-ordinate their efforts with the relevant regulatory authorities. Such authorities shall then keep watch on the institution that employs the DCA in a bid to pursue the matter and take appropriate follow-up actions.
In addition to law enforcement, the Police will actively publicise successful enforcement operations and prosecution actions to deter improper debt collectors or DCAs from engaging in illegal debt collection practices. Furthermore, the Police advise members of the public that they should, when applying for a loan, choose licensed money lenders or institutions, and, at the same time, take into consideration their repayment ability in a prudent manner, so as to reduce the chance of nuisances from improper debt collection practices in the future.
Ends/Wednesday, May 10, 2017
Issued at HKT 14:30
Issued at HKT 14:30