12 February 2003

Dear Sir / Madam,

Complaints against Debt Collection Agents employed by Authorized Institutions

I write to inform you of the main results of the industry survey on complaints against debt collection agents (DCAs) for the fourth quarter of 2002. Please see Annex for details.

During the reporting period, 168 of the 222 surveyed authorized institutions (AIs) did not employ any DCAs. For the 54 AIs using the services of DCAs, they had altogether assigned 193,546 accounts to 32 DCAs.

25 of these 54 AIs received a total of 260 complaints against 23 DCAs (compared with 283 complaints received by 36 AIs against 22 DCAs in the previous quarter). On average, the incidence of complaints was 1.34 complaints per 1,000 accounts assigned, down from 1.46 in the third quarter. 29 AIs using the services of DCAs did not receive any complaints. Meanwhile, the number of complaints lodged by innocent third parties decreased to 16 from 32.

Five instances of substantiated breach of the Code of Banking Practice were reported, as compared with seven in the third quarter. These cases involved the use of harassment or improper debt collection tactics, failure to identify the AI for which the DCA was acting and failure to keep record of collection actions. The AIs concerned have taken disciplinary actions against the DCAs in all cases.

While the survey shows a reduction in DCA complaints received by AIs, AIs should remain vigilant in their monitoring of DCAs' performance. In particular, effective measures must be taken to prevent innocent third parties from being harassed.

We hope you find the information useful.

Raymond Li
Executive Director (Banking Development)