|Q:||How to apply for a money lender license?|
|A:||Applicants are required to complete and submit the relevant documents to the Companies Registry and Hong Kong Police Force to review and the license would be issued after the licensing court hear and determine the application.|
|Q:||How can I know whether a company is a licensed money lender?|
|Q:||How can Money Lenders Licence - Additional Licensing Conditions protect borrowers from being misled by money lending-related malpractices?|
Money lender is required to carry out due diligence to confirm whether intermediary is involved before entering into any loan agreement of loan with customer under the Money Lenders Licence - Additional Licensing Conditions, which take effect from 1 December 2016 (the “Additional Licensing Conditions”). Money lender can only accept loan application referred by an intermediary if:
1.The intermediary confirmed in writing that he has not charged any fees on borrower;
2.The intermediary has been appointed by the money lender and registered on the Register of Money Lenders; and
3.The borrower has provided a copy of the intermediary agreement to money lender.
In addition, money lender must establish and maintain proper systems and procedures to ensure that intermediaries shall be informed of and observe the Money Lenders Ordinance and licensing conditions. The introduction of the Additional Licensing Conditions enhances the transparency of relationship between money lender and intermediaries, which in turn facilitate borrower and licensed money lender to prevent deception.
|Q:||Under the Additional Licensing Condition, all money lenders are required to include the risk-warning message – “you have to repay your loans” in all money lending advertisements to remind borrowers to take into account their ability to repay before applying for loan. What additional measures will LMLA member take to fulfill this purpose?|
In accordance with the Code, approval of loan is subject to credit assessment which should take into account the borrower’s ability to repay. In doing so, member may have regard to such factors as:
(a) prior knowledge of the customer’s financial affairs gained from
(b) the customer’s income and expenditure;
(c) the customer’s assets and liabilities;
(d) information obtained from credit reference agencies; and
(e) other relevant information supplied by the applicant.
|Q:||How to determine how much to borrow?|
|A:||Applicant should carefully assess the current and future financial condition, financial needs and repayment ability before apply for the loan. Only borrow the amount of loan that actually needs.|
|Q:||Differences between Instalment Loans and Revolving Loans?|
|A:||Instalment loan is required to make repayment by monthly instalments during a specified tenor to facilitate his financial management. |
A revolving loan is a credit facility offered on a standby basis, which can drawdown the standby loan with whole or partial for use whenever necessary. Interest is calculated on the drawdown amount on a daily basis.
|Q:||What is a credit report and a credit score?|
|A:||A credit report is a record of a customer's credit history, which is provided by banks, financial institutions or from the public records. Generally, financial institutions will obtain a credit report, including credit account information, account delinquency data, recent credit enquiries and historical data from a credit reference agency after receipt of a loan application.|
A credit score is a numerical snapshot of a customer's credit report according to a customer's credit account information, account delinquency data, recent credit enquiries, historical data and public record data. Financial institutions will also make decisions according to the risk acceptance, internal credit score, an applicant's demographic and financial information.
|Q:||What best practices should be followed by LMLA members when carrying out debt collection activities?|
All members of LMLA are expected to comply with Code of Money Lending Practice (the “Code”), which is issued for the purpose of promoting good money lenders practices by setting out the minimum standards which members should follow in their dealings.
The Code stipulates that a member and its collection agency should not attempt to recover debts from third parties (including referees, family members or friends of the debtors) if the latter have not entered into a formal agreement with member to guarantee the liabilities of the debtors
The Code also requires members and third party debt collection agencies appointed by the member to collect debts should act within law and observe strict duty of confidentiality in respect of customer information. In addition, harassment tactics or improper debt collection tactics must not be used in debt recovery actions, including putting up posters or writing on the walls of the debtor’s residence or other actions designed to humiliate the debtor publicly, pestering the debtor with persistent phone calls etc.
|Q:||How to make a complaint to a licensed money lender?|
|A:||The complainant could make a complaint directly to the relevant money lender or make a complaint to the relevant institution or department. If the licensed money lender is a member of LMLA, the complainant could also make a complaint through LMLAby post or by e-mail.|