XN000022-1980-05-28 — Page 5

WEDNESDAY, MAY 28, 1980

NEW MONEY LENDING LAWS LONG OVERDUE

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UPDATING OF LEGISLATIONS GOVERNING MONEY LENDING IN HONG KONG IS LONG OVERDUE, ESPECIALLY IN VIEW OF THE SERIOUS SOCIAL PROBLEMS THAT ARISE FROM LOANSHARKING, THE ATTORNEY GENERAL, THE HON JOHN GRIFFITHS SAID IN THE LEGISLATIVE COUNCIL MEETING TODAY (WEDNESDAY).

MOVING THE SECOND READING OF THE MONEY LENDERS BILL 1980, MR GRIFFITHS SAID THAT THE PRESENT MONEY LENDER ORDINANCE PROVIDES NO CONTROL WHATSOEVER OVER THE TYPE OF PEOPLE WHO ENGAGE IN MONEY LENDING.

+IT IS WELL-KNOWN FOR INSTANCE THAT A NUMBER OF LOANSHARKS ARE IN FACT RUN BY TRIADS AND THAT GROSSLY EXCESSIVE INTEREST RATES ARE VERY FREQUENTLY CHARGED... UP TO 1 400 PER CENT NOT UNKNOWN, HE SAID.

MR GRIFFITHS ALSO NOTED THAT UNACCEPTABLE AND OFTEN CRIMINAL METHODS OF ENFORCING PAYMENT BY PHYSICAL FORCE ARE COMMON.

THE PRESENT LAW, THE MAIN PROVISIONS OF WHICH ARE A REQUIREMENT TO REGISTER WITH THE REGISTRAR OF COMPANIES WHO HAS NO POWER TO REFUSE REGISTRATION, IS NOT CAPABLE OF DEALING WITH THE PROBLEM, HE SAID,

THE ATTORNEY GENERAL ALSO SAW THE PENALTIES FOR FAILURE TO COMPLY WITH THE ORDINANCE – A $1 000 FINE ON FIRST OFFENCE AND A FINE OF $2 000 OR THREE MONTHS IMPRISONMENT ON SUBSEQUENT OFFENCES - AS WHOLLY INADEQUATE.

UNDER THE NEW BILL, MR GRIFFITHS SAID, A TRANSACTION WILL BE PRESUMED PRIMA FACIE TO BE EXTORTIONATE WHERE THE EFFECTIVE RATE OF INTEREST CHARGED BY THE MONEY LENDER EXCEEDS 48 PER CENT.

+BUT IN ORDER TO DECIDE WHETHER THE TRANSACTION IS IN FACT EXTORTIONATE IN ALL THE CIRCUMSTANCES OF THE PARTICULAR CASE THE COURT WILL HAVE REGARD TO ALL THE CIRCUMSTANCES,+ HE NOTED.

IN THE CASE OF A LOAN MADE BY ANY PERSON, WHETHER OR NOT A LICENSED MONEY LENDER, WHERE THE EFFECTIVE RATE OF INTEREST EXCEEDS 60 PER CENT THE AGREEMENT WILL BE UNENFORCEABLE AND THE LOAN IRRECOVERABLE IN LAW.

FURTHERMORE, THE BILL ALSO PROVIDES THAT TO MAKE A LOAN AT A RATE OF INTEREST EXCEEDING 60 PER CENT WILL CONSTITUTE A CRIMINAL OFFENCE PUNISHABLE BY FINE AND/OR IMPRISONMENT, HE ADDED.

THE ATTORNEY GENERAL EXPLAINED THAT THE QUESTION AS TO THE LEVEL AT WHICH INTEREST RATES BECOME UNACCEPTABLE WAS DECIDED BY REFERENCE TO THE REPUTABLE COMMERCIAL PRACTICE IN HONG KONG AS WELL AS TO ATTITUDES TAKEN IN OTHER JURISDICTIONS.

/+A RATE