1. What are debt collection agents?

1. What are debt collection agents?

Debt collection agents generally refer to firms of business appointed by a lender to recover unpaid debts on its behalf. 

Lenders that are Authorized Institutions (as defined in the Banking Ordinance (Cap. 155)), SFC-licensed institutions or licensed money lenders must comply with the Code of Banking Practice, the Debt Collection Guidelines issued by the SFC or the Code of Practice issued by the Licensed Money Lenders Association Limited respectively.

If a lender is an Authorized Institution or a licensed money lender, the lender must give a borrower advance written notice that a debt collection agent will be engaged to recover the amount owing to the lender. The notice should contain the following details:

1. The overdue amount repayable by the borrower;
2. The length of time the borrower has been in default; 
3. The contact telephone number of the lender’s debt recovery unit that is responsible for overseeing the collection of the debt from the borrower; 
4. The costs and expenses incurred by the lender for which the borrower is liable to reimburse the lender; and 
5. A reminder that the borrower should immediately report any improper debt recovery actions taken by the debt collection agent to the lender.

The Code of Banking Practice and the Code of Practice which apply to Authorized Institutions and licensed money lenders respectively state the relationship between the lender and the debt collection agent is one of principal and agent. This means a lender remains accountable to any debtor for complaints arising out of the debt collection activities carried out by the debt collection agent and should not disclaim any responsibility for misconduct on part of the debt collection agent.