Regulating Subprime Lending in Hong Kong and the Need for Reforms to Better Protect Vulnerable Consumers

Abstract

<p>Hong Kong’s subprime moneylending sector has grown rapidly in recent decades and exploitation of the vulnerable continues largely unabated. Hong Kong’s first Money Lending Ordinance, which was enacted in 1911, introduced a rudimentary system of regulation, which was improved by its successor, the Money Lending Ordinance of 1980. Since 1980, there have been some further improvements. This article traces the historical development of moneylending legislation in the context of Hong Kong’s free market and non- intervention policy and how that has resulted in a lack of an effective safety net for the financially disadvantaged. This article compares the developments in the UK and Singapore and considers what lessons can be learnt from their experience. This article will make some suggestions for further improving the regulatory framework, thereby advancing financial inclusion of lower income and other vulnerable borrowers.<br></p>