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LCQ21: Foreign domestic helpers being debt-ridden and overcharged by intermediaries for foreign domestic helpers
     Following is a question by the Hon Paul Tse and a written reply by the Secretary for Labour and Welfare, Mr Stephen Sui, in the Legislative Council today (May 24):
     It has been reported that the Police earlier smashed a loan shark syndicate which had made loans that amounted to about $10 million to as many as 1 200 foreign domestic helpers (FDHs), charging them interests at rates as high as 120 per cent per annum for the loans.  Moreover, some FDHs said that they had been persuaded by FDH intermediaries (intermediaries) to borrow money from loan shark syndicates in order to pay fees overcharged by such intermediaries.  On the other hand, when FDHs took loans, the residential addresses they provided to the finance companies were usually those of their employers, and some of them listed their employers as loan referees without authorisation.  As a result, when such FDHs failed to repay the loans, their employers were often subject to the harassment of finance companies' debt collection activities.  In this connection, will the Government inform this Council:
(1) of the number of loan shark syndicates which made loans to FDHs, smashed by the Police in each of the past five financial years, as well as the total amount of loans involved and the number of persons arrested;
(2) of the number of prosecutions instituted in each of the past five financial years against intermediaries for overcharging and other irregularities and, among such cases, the number of those involving collusion with finance companies in coercing FDHs to take, or tricked them into taking, loans charging high interest rates, together with the details of such cases;
(3) given that a recent survey has found out that 70per cent of the intermediaries charged FDHs commissions of as high as 13 times of the statutory ceiling, whether the authorities have conducted an investigation into this, and a study on the issues arising from such practice of the intermediaries (including FDHs taking loans of high interest rates, stealing properties of their employers or engaging in other unlawful activities due to FDHs' inability to pay the fees); if so, of the outcome of such investigation and study, as well as the follow-up measures; if not, whether they will immediately conduct such an investigation and study;
(4) given that the Secretary for Labour and Welfare indicated earlier that the Government planned to introduce an amendment bill to this Council in the second quarter of this year to provide a legal basis for the Code of Practice for Employment Agencies promulgated in January this year and to increase the penalties for employment agencies overcharging commissions, of the work progress in this respect, and whether the bill will include provisions regulating intermediaries' practice of double-charging FDHs (i.e. the intermediary concerned, through a company set up in the country exporting FDHs, charges an FDH a fee before her arrival in Hong Kong and charges that FDH again for another fee upon her arrival in Hong Kong);
(5) given that FDHs from Cambodia will soon be introduced into Hong Kong, whether the authorities will take new measures to prevent the intermediaries concerned from overcharging such FDHs and persuading them to take loans of high interest rates; and
(6) of the number of cases reported, in each of the past five financial years, by the employers about being harassed by finance companies' activities for collecting debts from their FDHs and the total amount of debts involved; of the measures in place to protect the employers from such harassment?

     Having consulted the Security Bureau and the Financial Services and the Treasury Bureau, I provide a consolidated reply to the question raised by the Hon Paul Tse as follows:

(1) The Police deploy an intelligence-led approach to take enforcement actions from time to time against loansharking syndicates which lend money to FDHs.  For instance, the Police conducted an operation codenamed Operation POLARINE in March 2017, and successfully neutralised a local loansharking syndicate and arrested its two local masterminds and eight Filipino members.  The arrested persons were suspected to have loaned money to around 1 200 Filipino domestic helpers at an annual interest rate of 120 per cent, involving a sum of over $10 million.
     The Police do not maintain the figures requested in this part of the question.
(2) to (5) Employment agencies (EAs) in Hong Kong are regulated by Part XII of the Employment Ordinance (EO) (Cap. 57) and the Employment Agency Regulations (EAR) (Cap. 57A).  To ensure that EAs operate in compliance with the laws, the Labour Department (LD) conducts regular and surprise inspections, investigates complaints and prosecutes law-defying EAs.
     According to EO and EAR, EAs are not allowed to receive from job-seekers (irrespective of whether they are local job-seekers or FDHs) commission of an amount exceeding 10 per cent of the job-seeker's first month's wages upon each successful placement.  LD does not tolerate EAs overcharging job-seekers (including FDHs) on commissions.  FDHs are encouraged to file complaints with LD if they are suspected of being overcharged on commissions.  LD will take follow-up actions promptly upon receipt of complaints.  If there is sufficient evidence, prosecution will be taken out.  Between 2012 and 2016, LD successfully prosecuted 2, 5, 4, 12 and 8 EAs in the respective years.  Amongst these EAs, 23 were convicted of overcharging job-seekers on commissions or unlicensed operation (Note).

     Since 2014, LD has introduced various measures with a view to stepping up the regulation of EAs.  In addition to increasing the annual inspection target, LD promulgated a Code of Practice for Employment Agencies (the Code) in January 2017 for the industry to follow.  The Code sets out the statutory requirements that EAs must comply during operations as well as the minimum standards which the Commissioner for Labour (C for L) expects of an EA, including the requirement that EAs should avoid getting involved in financial affairs of job-seekers.  If an EA has breached the Code, C for L may refuse to issue or to renew, or revoke the EA licence if he is satisfied that the licensee(s) concerned is/are not a fit and proper person(s) to operate an EA.  The Government plans to introduce an amendment bill into the Legislative Council later to, amongst other things, impose heavier penalty on the offence of overcharging job-seekers by increasing the maximum fine of $50,000 at present to a maximum fine of $350,000 and an imprisonment of three years, extend the scope of the offence of overcharging job-seekers on commissions to other relevant persons in addition to the licensee and provide a legal basis for the Code.
     On the issue of FDHs being charged a huge amount of intermediary or training fees by the intermediaries back in their homeland, the Hong Kong Special Administrative Region Government has registered serious concern with the senior government officials and the Consulates General (CGs) in Hong Kong of FDHs' home countries, and urged them to tackle the problem at source to alleviate the burden of the helpers.  LD will continue to liaise closely with the relevant CGs in Hong Kong.  Moreover, LD will continue to conduct various publicity and education activities in order to remind EAs that they should comply with the laws in Hong Kong and the Code, and not to help any persons, organisations or companies located in or outside Hong Kong to collect fees, or to get involved in the financial affairs of FDHs.  LD will also continue to enhance FDHs' awareness of their rights and channels for seeking redress.
(6) Pursuant to the Money Lenders Ordinance (Cap. 163), all licensed money lenders shall carry on their businesses in accordance with the licensing conditions imposed by the licensing court.  Debt collection activities and collection of personal data (including personal data of referee) are regulated by the licensing conditions, which include prohibiting a money lender and his debt collectors from recovering debts from anyone except the debtor, or from harassing anyone while trying to locate the whereabouts of the debtor.  A money lender and his debt collectors are also prohibited from adopting unlawful or improper debt collection practices.  In addition, the licensing conditions require that a money lender shall, when collecting or receiving personal data (including that of a referee) for his business purpose, take appropriate steps to ensure that there is no contravention of the provisions of the Personal Data (Privacy) Ordinance (Cap. 486).  If a licensed money lender is in breach of any condition of the licence, it may constitute a criminal offence and the licensing court may make an order revoking or suspending his licence or reject the licensee's application for renewal of licence.
     Attaching great importance to combating illegal debt collection activities, the Police have set up a dedicated team to closely monitor the trend of improper debt collection practices in various districts, and formulated 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 through distribution of leaflets at residential buildings and request for assistance from management companies of public housing estates and private residential estates to thwart debt collection agencies' illegal or improper debt collection activities therein.  The Police will also continue to disseminate messages against improper debt collection practices through various channels and publicise successful enforcement actions and prosecution cases as deterrence.
     The Police do not maintain the figures requested in this part of the question.

Note: Other cases included failing to display the EA licence or the schedule on prescribed commission, failing to notify LD of the change of management or failing to maintain records in compliance with the law.
Ends/Wednesday, May 24, 2017
Issued at HKT 15:40
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