The Hong Kong government’s latest measures to strengthen oversight of licensed money lenders took effect on 1st August, resulting in several prominent finance companies withdrawing from the foreign domestic helper lending market. UA Asia United Finance, regarded as an industry leader, confirmed to this publication that it has ceased offering loan services to foreign domestic helpers, citing the changing market environment as the key factor behind this strategic business adjustment. The company stated that this move is aimed at maintaining steady growth in response to evolving regulations.

Industry analysts believe that UA’s withdrawal is primarily due to its business model, which focused on debt consolidation and structured repayment for foreign domestic helpers. The new rules require that debt servicing ratios must not exceed thirty-five per cent of monthly income, making it particularly challenging for such lending models to comply. With the statutory minimum wage for helpers set at five thousand one hundred Hong Kong dollars, and the assumption of a monthly income of six thousand dollars, the new ceiling means the maximum loan amount approved would only be a little over twenty thousand dollars, calculated on a twelve-month tenure with an interest rate of approximately thirty per cent.

UA Asia United Finance’s chief executive, Paul Lui, previously revealed that clients earning twelve thousand dollars a month or less, including low-income earners and domestic helpers, represent merely two per cent of the company’s overall loan portfolio. Besides UA, other financial firms have also withdrawn similar services. Chan Tsz-hong, convener of the Finance Industry Practitioners Association, noted that out of around thirty financial companies operating in the market, four to five have already ceased providing loans to foreign domestic helpers.

Sources: Dimsum Daily