Secretary for Financial Services & the Treasury Christopher Hui welcomed the passage of the amendments to the Money Lenders Ordinance by the Legislative Council today.

According to the amended ordinance, which will take effect from December 30, the statutory interest rate cap for lending will be lowered from 60% to 48% per annum, while the threshold of extortionate rate will be lowered from 48% to 36% per annum.

Mr Hui said there are growing concerns about interest rates charged on lending in recent years, including fears that excessively high interest would harm borrowers, particularly those with low incomes, and lead to other social problems.

He emphasised that the Government’s plan to lower the statutory interest rate cap for lending has taken into consideration the Consumer Council’s recommendations, the effective interest rates adopted by the local money lending sector, the interest rate cap for lending overseas, as well as other market statistics.

Last year, the Government enhanced conditions on money lenders licences, including requiring money lenders to undertake an assessment of the borrower’s ability to make repayments and have due regard to the outcome of the assessment before entering into a loan agreement for an unsecured personal loan. Regulations of advertisements of money lenders and protection of loan referees were also enhanced.

Mr Hui added that the Government will continue to review regulatory measures for money lenders, promulgate the importance of prudent borrowing through public education, and induce more responsible lending behaviours among money lenders in order to protect the public interest.

Source: GovHK