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The following is a question by the Hon Ho Chun-yan and a reply by the Secretary for Security, Mrs Regina Ip, in the Legislative Council today (Wednesday):
Question:
In view of the recent increase in the number of cases of debt collection by unlawful means, will the Government inform this Council:
(a) of the number of complaints about debt recovery actions of debt collection agencies received by the Police in each of the past 12 months; and of the number of prosecutions initiated in response to these complaints;
(b) whether it is aware of the number of complaints about illegal practices of harassment or intimidation by debt collection agencies received each month by the Hong Kong Monetary Authority (the Authority) during the same period, as well as the detailed breakdown of these unlawful practices by types;
(c) whether it is aware of how the Authority ensures that banks will comply with the guidelines on debt collection practices set out in the Code of Banking Practice, and how it deals with banks not complying; and
(d) whether further measures or legislation will be introduced to regulate the debt collection activities of these agencies?
Reply:
Madam President,
(a) In the past 12 months, there was a total of 964 cases reported to the Police concerning abusive debt collection activities. The monthly breakdown is attached at Annex A. Of the 964 cases, 86 cases were prosecuted involving 150 defendants.
(b) In the past 12 months, the Hong Kong Monetary Authority (HKMA) hotline received a total of 224 complaints relating to debt collection activities. 166 of them were related to causing nuisance to the complainant, 36 to intimidation, 13 to defamation and 9 to the use of violence. The monthly breakdown is attached at Annex B.
(c) The authorised institutions (which include under the Banking Ordinance, licensed banks, restricted licence banks and deposit-taking companies) are not required to report to the HKMA how they conduct their debt collection activities. However, the two industry associations (i.e. the Hong Kong Association of Banks and the Deposit Taking Companies Association) have introduced in July 1997 a Code of Banking Practice (the Code) for compliance by their members. The Code was endorsed by the HKMA. The Code requires, inter alia, authorised institutions to establish effective procedures to monitor the performance of their debt collection agencies and prohibit authorised institutions from passing information about the referees or third parties, other than the guarantors, to their debt collection agencies.
In February 1998, the HKMA conducted a survey on compliance with the Code including those requirements relating to debt collection activities. The situation was considered satisfactory. Out of the 204 authorised institutions surveyed, 60 of them indicated that they employ/use the services of debt collection agencies. All have specified in the relevant contracts or written instructions that the debt collection agencies must not resort to intimidation or violence.
The HKMA has set up a hotline since April 1996 to receive complaints from the public concerning improper debt collection activities of authorised institutions. This serves to alert the HKMA of authorised institutions which are not complying with the Code. Where complaints have been received, the HKMA will follow up with the authorised institutions concerned to ensure that necessary action is taken to rectify the malpractices identified.
The HKMA monitors compliance with the Code as part of its regular supervision of authorised institutions through meetings with their senior management as well as on-site examinations on the control system of the authorised institutions. In considering action to be taken in respect of a breach of the Code, the HKMA would have regard to the seriousness of the breach, whether it is deliberate or unintentional and whether it may be detrimental to the interests of depositors. If necessary, the HKMA may consider the use of the powers available under the Banking Ordinance as appropriate. These powers include the commissioning of an auditor's report on the internal systems of control of the authorised institution, the imposition of restrictions on the operations of the authorised institution and in an extreme case, the suspension or revocation of the licence of the authorised institution.
(d) There are plenty of provisions under the present criminal law to deal with various illegal practices employed by debt collection agencies. For instance, debt collectors who resort to intimidation or criminal damage can be prosecuted either under the Crimes Ordinance or the Summary Offences Ordinance.
However, in view of the public concern on this issue and the recent increase in the number of cases of debt collection by illegal means, the Chief Justice and the Secretary for Justice have recently referred the topic of debt collection activities to the Law Reform Commission (LRC) for further study. The LRC will form a sub-committee to consider the adequacy of the existing law and to recommend such changes as appropriate. The Administration will consider the need for legislation to regulate debt collection activities in the light of the findings of the LRC.
Annex A
Month Number of reported cases
August 97 40
September 97 36
October 97 25
November 97 28
December 97 49
January 98 97
February 98 108
March 98 106
April 98 100
May 98 132
June 98 93
July 98 150
Total 964
Annex B
Month Number of complaints received
August 97 10
September 97 7
October 97 25
November 97 16
December 97 12
January 98 16
February 98 19
March 98 25
April 98 17
May 98 11
June 98 15
July 98 51
Total 224
End/Wednesday, September 9, 1998
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