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LCQ2: Preventing and combating improper debt collection practices

     Following is a question by the Hon Albert Chan and a reply by the Secretary for Security, Mr Lai Tung-kwok, in the Legislative Council today (June 8):


     In its reply to my question at the Council meeting of July 4, 2012, the Government indicated that the Police attached great importance to combating illegal debt collection activities conducted by debt collection agencies (DCAs).  However, I have learnt that the situation of debtors being harassed by debt collection activities is worsening and it is still very common for banks, finance companies, telecommunications service companies, beauty service companies and tutorial teachers to hire DCAs to collect money owed by their customers. In this connection, will the Government inform this Council:

(1) of the number of reports received in each year since January of 2012 by the Police from members of the public about the harassment caused by DCAs' debt collection practices;
(2) whether the Government will consider afresh accepting the recommendations in the report of the Law Reform Commission of Hong Kong on "The Regulation of Debt Collection Practices" published in 2002 that a criminal offence of harassment of debtors and others should be created, and a statutory licensing system to monitor DCAs should be established; if it will, of the details; if not, the reasons for that; and

(3) whether it will consider introducing new enforcement measures to curb the harassing practices adopted by DCAs to recover debts; if it will, of the details; if not, the reasons for that?



     The Government is concerned about the nuisance of improper debt collection practices to the public, and has adopted a multi-pronged approach through measures like stepping up enforcement and close monitoring of debt collection practices of the sector concerned by various regulatory authorities, as a means to actively prevent and combat such practices. In 2015, the number of such reports was 10 860, a decrease of 278 cases as compared with 11 138 in 2012. My reply to the three parts of the Hon Albert Chan's question, upon consultation with the Financial Services and Treasury Bureau (FSTB) and Constitutional and Mainland Affairs Bureau, is as follows:

(1) The number of crime reports relating to debt-collection ,for example, intimidation, blackmail, criminal damage, etc. received by the Police in the past few years dropped from 1 951 in 2012 to 1 523 last year, and the respective figures in 2013 and 2014 were 1 538 and 1 509. It can be seen that crime reports relating to debt-collection registered a slight decline in the past few years. In the first four months this year (i.e. 2016), a total of 566 crime reports relating to debt-collection were received by the Police, a rise of 10.5 per cent compared to 512 cases in the same period last year. The majority of these cases concerns criminal damage.

     Regarding non-crime harassment,for example, harassment by telephone calls, harassment by visits, etc, the related number of reports rose from 9 187 in 2012 to 9 337 last year, and the respective figures in 2013 and 2014 were 8 796 and 8 661. In the first four months this year (i.e. 2016), a total of 3 223 debt-related non-crime harassment reports were received by the Police, and such figure is comparable to that of the same period in last year.

(2) In September 2005, the Security Bureau, upon thorough consideration, gave a detailed response to the Law Reform Commission's report (the LRC's report) on "The Regulation of Debt Collection Practices" issued in 2002. With regard to the recommendation to enact a new criminal offence provision to regulate such practices, the Government considers that there are various legal provisions in place under existing legislation, including the Crimes Ordinance (Cap 200), Theft Ordinance (Cap 210), Offences Against the Person Ordinance (Cap 212), Summary Offences Ordinance (Cap 228), Societies Ordinance (Cap 151) and Post Office Ordinance (Cap 98) to guard against different kinds of illegal debt collection practices, such as splashing paint, jamming of door locks with glue, mailing of letters with threatening statements or "paper money for the dead", threatening by visits and so on. The Government is of the view that there is no need to introduce new criminal offence provisions with respect to the operation of debt collection agencies (DCAs).   

     Meanwhile, the LRC's report also recommended a licensing scheme to regulate the debt collection industry. Judging from operational experience of the law enforcement agencies, the Government considers that delinquent debt collection operators, in particular those run by triads, are unlikely to come forward for licensing in the first instance. The system would likely only cover prudent and ethical market operators, who would not engage in abusive activities even in the absence of a licensing regime. In this regard, the Government considers that introducing a licensing scheme will not be able to prevent undesirable elements from engaging in debt collection.  

     The Police will continue to enforce the law in a stringent manner and will launch investigations into and press charges against any crime-related debt collection practices. As for other non-crime but improper debt collection cases, the Police will, depending on the industry involved, continue to co-ordinate their efforts with relevant regulatory authorities, for example, if the case concerned involves banks, the Police will handle the case in co-ordination with Hong Kong Monetary Authority.

(3) The Police attach great importance to combating illegal debt collection activities, and continuously adopt pro-active measures to enhance the effectiveness of their enforcement actions. The Police have set up a dedicated team to closely monitor the trend of improper debt collection practices in various districts, and formulate comprehensive preventive and operational strategies in the light of specific circumstances. In addition, the Police will continue to step up patrol and co-operate with property management companies in respective districts through distribution of leaflets at residential buildings and request for assistance from management companies of public housing estates and private residential estates, in a bid to prevent loansharking syndicates from launching promotion or displaying advertisements in housing estates or within the building areas, so as to thwart DCAs' illegal or improper debt collection activities therein. On another front, the Police will continue to disseminate messages against improper debt collection practices through the media and publicise successful enforcement and prosecution actions as deterrence.

     In handling individual cases, the Police will continue to implement the internal guidelines drawn up particularly for cases of improper debt collection practices. Cases that involve criminal offences, such as those relating to criminal damage or intimidation, will be referred to dedicated criminal investigation teams for investigation, with a view to pooling together experience and expertise for investigation and evidence gathering, as well as instituting criminal prosecution in accordance with the law.

     In dealing with reports that may not involve criminal offences at the moment, the Police will, having regard to the circumstances, assess whether there is any possibility that such debt collection practices may turn into criminal offences, and will then classify such cases as "high threat" or "low threat" cases. Every "high threat" case will be referred to the criminal investigation teams for follow-up. For "low threat" cases, the Police will continue to monitor their developments. In case there are signs that the seriousness of the case has heightened, the criminal investigation teams will take over the investigation.
     If a DCA employed by an institution is suspected to have used improper or illegal means in its debt collection, the Police will co-ordinate their efforts with the relevant regulatory authorities. Such authorities shall then keep watch on the institution that employs the DCA in a bid to pursue the matter and take appropriate follow-up actions.
     In addition to law enforcement, the Police will take the initiative to publicise successful enforcement operations and prosecution actions to deter improper debt collectors or DCAs from engaging in illegal debt collection practices. Furthermore, when applying for a loan, members of the public are advised by the Police to choose licensed money lenders or institutions, and, at the same time, take into consideration their repayment ability in a prudent manner, so as to reduce the chance of nuisances from improper debt collection practices in the future.

     Thank you, President.

Ends/Wednesday, June 8, 2016
Issued at HKT 14:21


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