XN000022-1996-01-24 — Page 47

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Referee's consent on loan applications

Following is a question by the Hon Ngan Kam-chuen and a reply by the Secretary for Financial Services, Mr Rafael Hui, in the Legislative Council today (Wednesday):

Question:

At present, applicants for credit cards and/or personal loans from banks furnish information on their referees without the need to seek the latter's consent. When an applicant becomes insolvent and has disappeared, the financial institution concerned will make enquiries or even seek to recover the debt from the referee, thus causing nuisance to the referee. In this connection, will the Government inform this Council:

Reply:

(a)

(b)

whether it knows of the number of such cases in the past 3 years; and

whether consideration has been given to requiring financial institutions such as banks and finance companies to stipulate that applicants must submit their referees' written consent before their applications can be processed; if not, why not?

The Hong Kong Association of Banks and the Deposit-taking Companies Association have not received any complaints about attempts made by authorised institutions to recover debts from the referees of borrowers or credit card users in the past three years. The Hong Kong Monetary Authority (HKMA) is aware of one complaint from a referee who was approached by a bank to help locate a credit card user who had put down his name as a referee in the application form without his consent. While the Police keeps statistics on reported criminal cases related to debt recovery, it does not keep record of cases specifically on complaints by referees.

The Administration considers it a good practice for authorised institutions under the Banking Ordinance to require applicants for personal loans and credit cards to obtain the prior consent of the referees before the latters' names are entered into the application form. The HKMA has written to the banking industry associations to recommend authorised institutions to adopt this practice. The need for further guidance on this matter will be considered by the Working Party to be formed by the HKMA and the industry associations to develop a Banking Code of Practice, which aims to promote good banking practices and a fair and transparent relationship between authorised institutions and their customers.

End