9 August 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 second quarter of 2004. Please see Annex for details. The latest results show a continued improvement in the number and incidence of complaints.

During the reporting period, 159 of the 209 surveyed authorized institutions (AIs) did not employ any DCAs. For the 50 AIs using the services of DCAs, they together assigned 178,956 accounts to 32 DCAs.

21 of these 50 AIs received a total of 88 complaints against 19 DCAs (compared with 101^* complaints received by 23 AIs against 24 DCAs in the previous quarter). On average, the incidence of complaints per 1,000 accounts assigned decreased to 0.49 from 0.61^*. 11 complaints were lodged by unrelated third parties, versus 5 in the first quarter of 2004. 29 AIs using the services of DCAs did not receive any complaints.

One instance of breach of the Code of Banking Practice was reported, as compared with two cases in the previous quarter. The DCA concerned disclosed the indebtedness of the AI's customer to third parties and failed to keep proper dunning records. The AI had issued a warning letter to the DCA as a result.

The continued reduction in the number of DCA complaints is encouraging. I look forward to AIs' continued vigilance in monitoring the performance of their DCAs.

Yours faithfully,

Arthur Yuen
Executive Director (Banking Development)

Survey on DCA complaints received by AIs - Q2/2004

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

^* Revised figures.