Speech at Panel on Financial Affairs

Briefing on the work of Hong Kong Monetary Authority

Development of financial services

Noting that HKMA had been working closely with relevant associations in the banking industry to introduce more consumer credit reference agencies (“CRAs”) in Hong Kong, Mr CHAN Chun-ying enquired about the progress concerned including the resources for taking forward the initiative (e.g. for conducting the relevant system testing) and the implementation timetable.

DCE(B)/HKMA advised that the relevant tender exercise led by the industry was underway largely according to schedule, despite slight delays due to COVID-19. It was envisaged that the tender would be awarded in mid-2021, followed by work on the technical details, and the new CRA system would be in operation by end-2022. He noted that the Hong Kong Interbank Clearing Limited had allocated sufficient resources to support this project.

Schemes administered by the Hong Kong Mortgage Corporation

Mr CHAN Chun-ying opined that HKMC’s Reverse Mortgage Programme (“RMP”) was not well received by property owners due to the relative low caps imposed on the maximum amount of specified property value and the low monthly payout amount which was insufficient to meet applicants’ daily expenses in the long run. Considering the rising inflation rate and property prices, he enquired whether HKMA would conduct a comprehensive review on RMP.

CE/HKMA responded that HKMA conducted review of RMP on a regular basis, and there were plans in the near future to step up on the promotion of the retirement schemes (including RMP) administered by HKMC.

Work of the Financial Services Development Council

Resources of the Financial Services Development Council

Mr CHAN Chun-ying commended FSDC for its quality research reports and efforts in market promotion. Pointing out that there was only modest increase in FSDC’s budget for 2021-2022 over that of 2020-2021, he expressed concern about the adequacy of resources for FSDC in carrying out its various functions, especially on market promotion, and requested FSDC to provide a comparison of the approved budget and actual expenditure for 2020-2021.

C/FSDC replied that the main difference between the approved budget and actual expenditure for 2020-2021 was the increase in expenditure for implementing social media marketing strategy. He undertook to provide the relevant information requested by Mr CHAN Chun-ying after the meeting.

Research work of the Financial Services Development Council

Noting that nearly half of FSDC’s staff was responsible for conducting research, Mr CHAN Chun-ying enquired if the manpower resources were sufficient to support FSDC’s research work in the future. Moreover, he sought information on how FSDC would collaborate with the Government in mapping out the strategies for promoting the development of the financial services industry, in particular in ensuring that the themes of FSDC’s research would be in line with the Government’s policy objectives.

C/FSDC said that due to increased workload on market promotion, half of FSDC’s staff responsible for conducting research also assisted in formulating marketing strategies relevant to the research themes/reports concerned. C/FSDC stressed that the objective of FSDC’s research was to expand the scope of the Hong Kong financial markets and enhance Hong Kong’s competitiveness as an international financial centre. The Policy Research Team would identify research themes and carry out the research to formulate relevant proposals for the consideration of the Government and regulators. FSDC would also co-ordinate with the Government and regulators on policy research relating to the macro-economic environment, such as the impacts of the monetary policies adopted by other jurisdictions in response to the COVID-19 pandemic on the economic development of Hong Kong.

Regulation of licensed money lenders

Improved licensing conditions for money lenders

Mr CHAN Chun-ying enquired whether the improved licensing conditions for money lenders were enforced by CR, and if so, whether CR had sufficient manpower to discharge the new duties.

DS(FS)SD said that most of the improved licensing conditions for money lenders would be enforced by CR, which had already established a dedicated team comprising staff with relevant enforcement experience. The Administration would review the manpower of CR when necessary.

Proposed lowering of the statutory interest rate cap

Mr CHAN Chun-ying  welcomed the Administration’s proposal of lowering the statutory interest rate cap and the extortionate rate. In particular, Mr CHAN cautioned that some money lenders might circumvent the measure by requiring clients to enter into loan agreements with high administration fees.

Noting members’ views, DS(FS)SD explained that any administration fees charged by money lenders had to be calculated in the interest rates as mandated under MLO. On the proposed new statutory interest rate cap, he explained that reference had been made to the prevailing interest rates of the local money lending sector including banks, relevant practices in comparable jurisdictions, as well as the community’s views.