Hong Kong Law Reform Commission

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THE LAW REFORM COMMISSION
OF HONG KONG

SUB-COMMITTEE ON DEBT COLLECTION

CONSULTATION PAPER ON

THE REGULATION OF
DEBT COLLECTION PRACTICES

This consultation paper can be found on the Internet at: <http://www.info.gov.hk/hkreform> during the consultation period.


Ms Cathy Wan, Senior Government Counsel, was principally responsible for the writing of this consultation paper.

CONTENTS

Preface

Terms of reference
The Sub-committee

1. Debt collection in Hong Kong

Introduction
Industry overview

2. Some features of extra-judicial debt collection

Stages of debt collection
Different types of debt collection activities
Extra-judicial debt collection
What causes abusive debt collection?
The nature of the debt collection process
The lack of professionalism among some debt collectors
Loose-lending
Economic downturn
The judicial process in debt recovery
Other factors

3. Existing criminal sanctions against abusive
debt collection in Hong Kong

Criminal law sanctions
Intimidation
Criminal damage to property
Threats to kill or murder
Theft and blackmail
Assault
Mens rea for assault
False imprisonment
Forcible detention
Triad offences
Summary Offences Ordinance (Cap 228)
Post Office Ordinance (Cap 98)
Criminal sanctions for participation
The principal
Secondary participation
Vicarious liability
Corporate liability

4. Existing civil remedies for abusive debt collection

Civil remedies for abusive debt collection
Trespass to the person
False imprisonment
Remedies for assault, battery and false imprisonment
Intentional physical harm other than trespass to the person /
Intentional infliction of emotional distress
Trespass to chattels
Defamation
Employer’s liability
Employer’s liability for independent contractors
Liability for an agent
Personal Data (Privacy) Ordinance

5. Other types of control on debt collection

Administrative control
Self-regulation by authorised institutions
Code of Banking Practice 1997
Personal Data (Privacy) Ordinance (Cap 486) and the
Code of Practice on Consumer Credit Data 1998
Personal Data (Privacy) Ordinance
Code of Practice on Consumer Credit Data 1998

6. Deficiencies of the existing controls on abusive
debt collection practices

Criminal law
Civil claims
Self-regulation by authorised institutions
Code of Banking Practice 1997
Personal Data (Privacy) Ordinance (Cap 486) and the
Code of Practice on Consumer Credit Data 1998

7. Legislation in other jurisdictions

Introduction
United Kingdom
The criminal offence of unlawful harassment of debtors
Protection from Harassment Act 1997
England and Wales
Offence of harassment
Offence of putting people in fear of violence
Civil remedy
Scotland
Malicious Communications Act 1988
Australia
Federal legislation
Provisions against abusive collection tactics
The United States of America
The Fair Debt Collection Practices Act 1977
Harassment or abuse
False, deceptive, or misleading representations or means
Unfair practices
Communications in connection with debt collection
Acquisition of location information
Further protection to consumers
Canada
Federal
Alberta
Other jurisdictions

8. Licensing

Introduction
United Kingdom
Criteria for licensing
Criminal sanctions for operating without a licence
Civil sanctions for operating without a licence
Australia
New South Wales
Licensing Agency, NSW Police
Review of the present NSW legislation
Victoria
Similar Legislation
Canada
Alberta
South Africa

9. Proposals for reform

Introduction
Criminal law
The criminal offence of unlawful harassment of debtors
Licensing
Commercial vs consumer debts
Licensing authority
Collection agencies and collectors
Exemptions
Collecting debts as a business / profession or otherwise
Criteria for licensing
Powers of the licensing authority
Statutory duties of collection agencies
Code of practice
Consumer credit data
Positive credit data in other jurisdictions
The United Kingdom – further information
The United States – further information
Australia – further information
Situation in Hong Kong
Efficiency of the judicial process
Self-regulation
Conclusion

10. Summary of recommendation

This Consultation Paper has been prepared by the Debt Collection Sub-committee of the Law Reform Commission. It does not represent the final views of either the Sub-committee or the Law Reform Commission, and is circulated for comment and criticism only.

The Sub-committee would be grateful for comments on this Consultation Paper by 30th September 2000. All correspondence should be addressed to:

The Secretary
The Debt Collection Sub-committee
The Law Reform Commission
20th Floor, Harcourt House
39 Gloucester Road
Wanchai
Hong Kong

Telephone: (852) 2528 0472

Fax: (852) 2865 2902
E-mail: hklrc@hkreform.gcn.gov.hk

It may be helpful for the Commission and the Sub-committee, either in discussion with others or in any subsequent report, to be able to refer to and attribute comments submitted in response to this Consultation Paper. Any request to treat all or part of a response in confidence will, of course, be respected, but if no such request is made, the Commission will assume that the response is not intended to be confidential.

Anyone who responds to this Consultation Paper will be acknowledged by name in the subsequent report. If an acknowledgement is not desired, please indicate so in your response.