3 May 2004

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 first quarter of 2004. Please see Annex for details. The latest results show a continuous improvement in the number and incidence of complaints.

During the reporting period, 161 of the 211 surveyed authorized institutions (AIs) did not employ any DCAs. For the 50 AIs using the services of DCAs, they together assigned 164,308 accounts to 33 DCAs.

23 of these 50 AIs received a total of 99 complaints against 24 DCAs (compared with 139 complaints received by 26 AIs against 18 DCAs in the previous quarter). On average, the incidence of complaints per 1,000 accounts assigned decreased to 0.60 from 0.73. 5 complaints were lodged by unrelated third parties, versus 13 in the fourth quarter of 2003. 27 AIs using the services of DCAs did not receive any complaints.

Two instances of breach of the Code of Banking Practice were reported, as compared with nil in the previous quarter. In one case, the DCA sent a dunning letter to the debtor’s former employer. In the other case, the DCA failed to verify a new address obtained before sending out dunning letters. The AIs concerned have taken disciplinary actions against the DCAs in both cases.

The continued reduction in the number of DCA complaints is encouraging. Nonetheless, it is important for AIs to remain vigilant in monitoring the performance of their DCAs.

We hope you will find the information useful.

Yours faithfully,

Raymond Li
Executive Director (Banking Development)

Survey on DCA complaints received by AIs – Q1/2004

Table 1: AIs using DCA service

Table 2: Number of DCAs employed by AIs

Table 3: Incidence of DCA complaints

Table 4: Status of complainants