The money lending industry has a long history in Hong Kong，It is also an important part of Hong Kong’s non-bank financial system.。According to Hong Kong’sMoney Lenders Ordinance》Definition，"Money Lender" means any person carrying on the business of lending money，or advertising statement、claim、Persons who in any way represent themselves to be engaged in such business。
As of the end of November 2010，Hongkonglicensed moneylenderThere are 624，Apply for a license154 companies renewed，32 companies are applying for licenses，2106 licenses expired，94 applications were rejected，214 companies withdrew their applications。Hong Kong money lenders do not accept deposits from the public，Only engaged in money lending business，Main business types include：
- personal and business credit；
- mortgage；
- car、office equipment、heavy machinery、Factory leasing；
- Credit card financing、promissory note discount；
- Small and medium enterprise loans；
- mortgage loan；
- Syndicated loans, etc.。
Hong Kong Money Lenders Ordinance：Core Legal Framework for Professional Money Lenders
Hong Kong promulgated the Money Lenders Ordinance in December 1980。The regulations are divided into 5 parts、36strip，formoneylenders license、moneylending trade、interest rate limit、Advertising regulations and enforcement investigations provide the underlying legal framework。
- Part one：Cover related functions、Confidentiality and other basic matters。
- part two：Prescribing restrictions on carrying on business as a moneylender、License application、License validity period、License revocation and suspension、License transferetc.。
- part three：Regulate the transactions of moneylenders，including agreement form、Money lender’s duty to provide information to borrowers、Money lender’s duty to provide information to guarantor、Borrowers’ early repayments and illegal agreements, etc.。
- Part 4：Prohibition on setting excessively high interest rates。
- Part 5：Regulate money lending advertising restrictions、Registrar and police investigative powers、Penalties and Disqualifications、Burden of proof, etc.。
Money lender licensing requirements and approval mechanism
To operate a money lending business in Hong Kong, a money lender’s license is required；Lending money to an unspecified majority in Hong Kong，Must be legally licensed。Money lender license management is handled by the Government Companies Registry，and has no direct relationship with the Hong Kong Monetary Authority。
Since the money lending business is a special industry，The registration office will forward the application to the Police for background check，The police have a key influence on the issuance of license plates。The license is valid for 12 months，The license must be renewed when it expires。
The Money Lenders Ordinance stipulates，Operating a money lending business without a license will result in fines and imprisonment；at the same time，Loans made by unlicensed moneylenders are not protected by law。
Two-tier interest rate limit：48%Compliance boundary with 60%
Hong Kong’s Money Lenders Ordinance adopts a two-tier interest rate structure：Annual interest rates less than 48% are generally considered legal；Annual interest rates exceeding 60% are illegal；The annual interest rate is between 48% and 60%，is not necessarily legal，It depends on the judge’s judgment。
with certain exceptions，anyone，Whether a licensed money lender or not，The annual interest rate of the loan shall not exceed 60%。48%There is room for judicial discretion in the range of 60%，Therefore, in order to avoid getting into legal disputes, Hong Kong commercial banks and money lenders，Loan interest rates are usually controlled below 48%。
A two-tier interest rate structure that prohibits lending at excessively high interest rates，Instant 48% sum 60%，Mainly refer to current business practices in Hong Kong and laws of other countries，For example, the relevant systems in the UK are formulated。
Advertising Disclosure and Regulatory Investigation Powers
- Any advertisement of a money lending institution must display the name of the money lender specified in the license，and must state the annual interest rate intended to be charged。
- Registrar or police officer of the rank of Superintendent and above，If there is reasonable suspicion that a money lender has committed an offense specified in the Money Lenders Ordinance，Access to moneylender's business premises，Request the production and inspection of the money lender’s license、accounts、Documents and other related information。
Improper Debt Collection and Consumer Protection：Key risks of regulatory concern
Improper debt collection has always been the focus of supervision of Hong Kong’s money lending industry。2009Year，Some members reported，Some foreign domestic helpers leave Hong Kong after borrowing money from moneylenders，Moneylenders often cause nuisance to former employers of domestic helpers in collecting outstanding debts。There have also been cases where debt collection agencies posted personal information about relatives in public places in order to collect debts.。
Relevant officials pointed out in 2010，Money lenders even provide personal information to debt collection agencies，Nor will it relieve him of his responsibilities as the principal.；Money lenders must ensure that the debt collection agencies they hire comply with the regulations。
The Hong Kong government is highly concerned about the harassment caused to citizens by bad debt collection practices，and through measures such as strengthening law enforcement and close supervision of debt collection practices by various regulatory agencies.，Actively prevent and combat related behaviors。The number of related reports dropped from 20,610 cases in 2005 to 18,203 cases in 2009，2010There is also a downward trend compared with 2009。
also，Some MPs have also received complaints，Reflecting that some moneylenders are too lenient in approving loans，Large loans to teenagers with no income or credit history。Relevant members think，This will have a negative impact on the growth of young people，And his parents are likely to eventually need to repay the loan on their behalf.。
The Hong Kong Licensed Money Lenders Association and the Money Lenders Code of Practice
Industry self-regulatory organization：Hong Kong Licensed Money Lenders Association
The Hong Kong Licensed Money Lenders Association is the trade organization for the money lending industry in Hong Kong.，Founded in December 1999，More than 30 members。The main responsibilities of the association include：
- Safeguard and protect the overall interests of licensed money lenders，Develop industry business operating codes；
- Encourage exchanges and cooperation among fellow moneylenders，Improve and promote business ethics and self-discipline among moneylenders；
- Under existing laws and the Money Lenders Ordinance，Lobbying the government and relevant agencies on money lending industry matters、consultation，The goal is to strive to become the most credible、Influential and authoritative representative and advisory groups，Improve the social status of the money lending industry。
Industry insiders pointed out，The number of guild members is relatively limited，The reason is that many money lending companies have unclear background departments.，The guild’s scrutiny is stricter，Only companies with clear backgrounds can become members。
Code of Practice for Money Lenders：Business self-discipline and customer rights protection
2002Year，The Hong Kong Licensed Money Lenders Association issued self-regulatory business operation guidelines "Code of Practice for Money Lenders"。The Code emphasizes the protection of consumer rights、Protect borrowers’ right to know the terms of service，and require the protection of customer data privacy。
The Code also emphasizes equal credit opportunities，Customers with disabilities should not be discriminated against，Nor can it simply be based on family status，For example, single parent、sexual orientation、Discriminate against customers on the basis of age or race。
In terms of credit assessment and contractual disclosures，The Code of Practice for Money Lenders sets out the following requirements:：
- Clarify credit assessment content，Ensure loan applicants understand the key terms of the loan contract。
- Money lenders should evaluate、After examining the applicant’s repayment ability，before a loan or overdraft can be approved。
- The moneylender should offer the loan interest rate to the customer、Will the interest rate change during the loan term?、Establish a basis for interest；when necessary，Should include annual interest rate and number of days per year used for calculation，Includes leap years and non-leap years。
- Restricting the conduct of debt collection agencies hired by moneylenders。
- Money lenders should establish a formal contractual relationship with the debt collection agency they hire.。
- The moneylender should specify in the contract or in writing，Debt collection companies are in the process of collecting debts，Do not threaten or use violence, either verbally or physically, against anyone。
- Money lenders should stipulate that debt collection agencies must not use harassing or unfair debt collection tactics。
Operating characteristics of Hong Kong money lending institutions：product、interest rate、Efficiency and funding
loan structure：Personal credit loans account for a high proportion
From the perspective of guarantee，Among the two money lending institutions surveyed,，Unsecured credit loans account for 75%，Mortgage accounts for 25%；The collateral is basically all real estate，Currently we do not accept mortgages and pledges of movable assets such as equipment.。
From the perspective of loan objects，80%loans to individuals，Customers range from ordinary citizens to doctors、lawyer、Senior government officials are covered，And the loan does not matter the purpose；20%of loans to businesses，Mainly working capital loans。In comparison，These two money lenders are wholly-owned lending companies in the Mainland.，90%of loans to SMEs。
loan term、Interest rate and single amount
Different money lending institutions have different loan terms、There are differences in interest rates and single loan amounts。Two moneylenders have more loans with a 1-year term，Maximum term is 20 years；Shorter periods include more than 10 days、1month loan。
The loan interest rate depends on the rating of the applicant，The highest interest rate is 48%，lowest interest rates，Secured loans can be as low as 3%，Unsecured loans available as low as 12%。Money lending agency reflects，Market competition is driving interest rates down。
Moneylenders are not allowed to charge handling fees，However, in fact, some institutions may collect money in disguised form。All fees should be included as part of the interest rate，The overall interest rate shall not exceed 48%。
One of the money lenders surveyed only lends to individuals in Hong Kong，No guarantee or mortgage，The maximum amount is 300,000，All are credit loans，Loan rejection rate 50%；This institution does not lend money to businesses，Its lending companies in the mainland mainly lend to enterprises.，But formally it is left to the individual business owner。Credit loan from another moneylender up to 1 million，Mortgage loans can reach more than 10 million。
Profitability and asset quality
The ROE of the two leading money lending institutions is about 20%，NPL is not high，Asset quality fluctuates with the economic cycle。overall，Better-run money lending institutions have lower NPL ratios，Among them, student loans have the lowest non-performing rate。
Loan collection typically involves hiring a professional collection agency，The collection company's share ratio is generally 28 cents or 37 cents。
Individuals can refinance when they are in debt crisis。at this time，The moneylender will negotiate with all creditors，Interest rate reduction and loan extension。An individual can also declare bankruptcy；Hong Kong individuals can reopen after 4 years of bankruptcy，Japan、In the United States, it is 7 years。
Transfers of good or bad assets rarely occur in the Hong Kong market。But due to competition，Some money lenders compete for customers from other money lenders，The method is to help customers repay their loans first，Re-issue loans to customers at lower interest rates。
Efficiency advantage：Loans can be completed within half an hour at the fastest
High efficiency is an important competitive advantage for money lending institutions，Loans can be issued as quickly as half an hour。The internal personal rating system of money lending institutions takes a long time to accumulate，Plus a mature external credit reporting system，Can significantly improve the speed of approval and loan disbursement。
One of the leading money lending institutions has had more new customers in recent years than commercial banks have expanded.。Money lending institutions generally believe that，It does not compete directly with banks，Because the customers are mainly customers that banks are unwilling to serve。
objectively，Banks have also created some market space for money lenders。For example，Hong Kong bank credit card debt interest rates range from 30% to 47%，The mortgage interest rate during the same period was approximately 2%。In view of this situation，Money lending institutions expand into a business：Grant loans to cardholders，Used to pay off credit card debts for cardholders。
| Credit card balance | HK$570,000 |
| Monthly repayment amount | HK$27,822 |
| total interest expense | HK$794,104 |
| Number of repayment periods | 294 |
| Refinancing amount | HK$570,000 + HK$100,000 |
| Monthly payment changes | down 46% |
| Changes in interest expense | down 81% |
| Changes in repayment terms | 246 months less，to 48 months |
government regulatory model：Relative freedom to operate in accordance with the law
Hong Kong's supervision and management of money lending institutions is generally relatively liberal，The premise is that money lending institutions shall not violate the Money Lenders Ordinance。
The Money Lenders Ordinance stipulates，The Registrar and the police have the right to enter the business premises of moneylenders and inspect books and other information。But in the research，Two of the largest moneylenders consider Hong Kong a free economy，Market entities operate freely in accordance with the law，It was not checked by the registry or the police。
Money lender license renewed annually。The main reasons cited by the police for denying moneylender licenses include the high number of complaints、There is wrongdoing。last two years，The government has convened a meeting of representatives of money lending institutions to discuss the money lending market，This is also the result of the initiative promoted by lending institutions。
Diversified funding sources：Money lending institutions have no plans to convert into commercial banks
Due to the diverse sources of funds,、Accurate market positioning、Lower regulatory burden，Hong Kong money lenders generally have no plans to convert into commercial banks。
Financing channels for Hong Kong money lenders include：
- Own funds；
- Listed；
- Debt issuance，For example, April 2011，One of the money lending companies surveyed issued a 3-year、4%500 million yuan bond；
- syndicated loan，For example, a money lending company under investigation raised approximately HKD 3 billion through syndicated loans.，Interest rate 25%，Belongs to credit loans, etc.。
When a bank grants credit to a lending institution，Some do not require mortgage guarantee，Some need。Because the source of funds is guaranteed、Light regulatory burden，Neither institution has plans to convert into a commercial bank。Even due to higher capital returns，When new shareholders wish to enter，Old shareholders will also refuse。
Mainland market expansion
The money lending institutions surveyed have actively expanded into the mainland market，And in Shenyang、Chongqing、Tianjin、Chengdu、Kunming、Establishing companies in Dalian and other places。The loan balance of one of the institutions in the Mainland increased by 123% year-on-year in 2010.。
Regulatory Implications：Compliance boundaries for non-deposit-taking money lenders
For not accepting deposits from the public、Systemic risks generally do not occur、Non-deposit-taking money lenders that will not force public resources to bail out，For example, institutions that will not apply for refinancing assistance from the central bank as the lender of last resort，No need for prudential regulation。Its core logic should be free trade in accordance with the law、Loss at your own risk。
However, non-prudential supervision does not mean no supervision。middle、Forward can speed up the introduction of laws and regulations related to money lenders，Entities lending to non-specified majority persons are required to apply for a license and operate in accordance with the law。When making legislation, we can focus on the following matters:：
- Is it necessary to stipulate that "interest rates above a certain level are illegal"；
- Regulate all important links in the money lending industry chain，including debt collection practices、Advertising behavior, etc.。
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