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515.5995

Guidelines & Circulars

Our Ref:
B1/1C
B9/67C

18 May 2009

The Chief Executive
All Authorized Institutions

Dear Sir/Madam,

Complaints Against Debt Collection Agents
Employed by Authorized Institutions

I write to inform you of the results of the industry survey on complaints against debt collection agents (DCAs) employed by authorized institutions (AIs) for the first quarter of 2009. Please see the Annex for details.

During the reporting period, 38 AIs used the services of DCAs. They together assigned 94,811 accounts to 26 DCAs.

A total of 30 complaints against 12 DCAs were received by 11 AIs (compared with 15 complaints against 9 DCAs received by 10 AIs in the previous quarter). The incidence of complaints per 1,000 accounts assigned increased to 0.32 from 0.16 in the previous quarter. As in the previous quarter, one complaint was lodged by an unrelated third party.

One instance of a breach of the Code of Banking Practice was reported during the quarter compared to nil in the previous quarter. In this case, the DCA concerned failed to verify address information obtained and wrongly pursued debt collection actions against an unrelated third party. The AI concerned has issued a written warning against the DCA and suspended assignment of new cases to it for a set period.

In another case, which did not involve specific breach of the Code, an AI has also taken disciplinary action against its DCA. The AI concerned has issued a warning letter to its DCA in view of the latter's failure to provide the debtor with the correct outstanding balance of her loan account upon request.

I would like to take this opportunity to remind all AIs of the need to monitor the activities of their DCAs vigilantly.

Yours faithfully,

Karen Kemp
Executive Director (Banking Policy)

c.c.
The Chairman, Hong Kong Association of Banks
The Chairman, The DTC Association
Secretary, Code of Banking Practice Committee
(Attn: Ms Jennifer Cheung - HKAB)
Secretary for Financial Services and the Treasury
Attn: Miss Clara Chan)

Annex

Survey on DCA complaints received by AIs - Q1/2009

Table 1: AIs using DCA service

Q1/2009 Q4/2008 Q3/2008 Q2/2008 Q1/2008
AIs receiving DCA complaints 11 10 10 7 10
AIs receiving no DCA complaints 27 28 29 33 30
Total 38 38 39 40 40

Table 2: Number of DCAs employed by AIs

Q1/2009 Q4/2008 Q3/2008 Q2/2008 Q1/2008
1 - 5 19 19 20 22 23
6 - 10 16 15 17 16 14
11 - 15 3 4 2 2 3
Total 38 38 39 40 40

Table 3: Incidence of DCA complaints

Q1/2009 Q4/2008 Q3/2008 Q2/2008 Q1/2008
DCA complaints received (A) 30 15 25 20 30
Accounts assigned (B) 94,811 91,457 88,144 86,244 73,724
Incidence of complaints per 1,000 accounts (C = A/B x 1,000) 0.32 0.16 0.28 0.23 0.41

Table 4: Status of complainants

Q1/2009 Q4/2008 Q3/2008 Q2/2008 Q1/2008
Debtors 26 13 17 16 21
Family members/friends 3 1 5 3 4
Referees 0 0 0 0 0
Unrelated third parties 1 1 3 1 5
Total 30 15 25 20 30
Last revision date: 1 August 2011
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