18 November 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 third quarter of 2004. Please see Annex for details. The latest results show a continued improvement in the incidence of complaints.

During the reporting period, 162 of the 208 surveyed authorized institutions (AIs) did not employ any DCAs. For the 46 AIs using the services of DCAs, they together assigned 193,911 accounts to 31 DCAs.

23 of these 46 AIs received a total of 90 complaints against 19 DCAs (compared with 88 complaints received by 21 AIs against 19 DCAs in the previous quarter). On average, the incidence of complaints per 1,000 accounts assigned decreased to 0.46 from 0.49. 16 complaints were lodged by unrelated third parties, versus 11 in the second quarter of 2004. 23 AIs using the service of DCAs did not receive any complaints.

Three instances of breach of the Code of Banking Practice (the Code) were reported, as compared with one case in the previous quarter. In two of the cases, the DCAs concerned failed to verify new contact information obtained and pursue debt wrongly from unrelated third parties. In the remaining case, the DCA concerned use a false name to communicate with the debtor and pestered the debtor’s family member for the debtor’s whereabouts. In all these cases, the AIs concerned have taken disciplinary actions against the DCAs. In particular, an AI has introduced a new penalty system to fine DCAs for breaching the Code.

Apart from taking disciplinary actions in the above cases which involved specific breach of the Code, two AIs suspended the contract with their DCAs during the period in view of the deficiencies in record keeping and high incidence of complaints of the DCAs.

I hope you find the information useful. I look forward to your continuous effort in monitoring the performance of your DCAs.

Yours faithfully,

(Raymond Chan)
Acting Executive Director (Banking Development)

Annex

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