2. Loan intermediary malpractices and scams

2. Loan intermediary malpractices and scams

There has been a rise in the number of complaints and reports from members of the public who suspected that they had fallen prey to scams related to money lending involving loan intermediaries.

Common tricks and deceptions used by loan intermediaries include:

1. Offering to help obtain a loan with low interest rate with a low requirement threshold; 
2. Claiming that no fees will be payable if the loan application is unsuccessful (in other words, “no success, no fee”);
3. Claiming that it works for a bank, a law firm or an accounting firm that provides services such as debt restructuring, credit improvement or accounting advisory in order to charge extortionate consultation fees; or
4. Pretending to be calling from a bank or a government department regarding problems relating to a personal loan or mortgage application with requests for a mortgage top up or a refinancing which is in fact not required.

Be cautious when arranging for a loan application:

1. As far as practicable, make the loan application directly with an Authorized Institution regulated by the Hong Kong Monetary Authority or reputable licensed money lender.
2. When selecting the loan product, read the contractual terms carefully and pay attention to the interest rates and other charges and fees related to the provision of the loans.
3. Evaluate if third party fees would be charged in addition to the loan intermediary’s fees, e.g. solicitor’s fees and property valuation fees. 
4. When engaging a loan intermediary, bear in mind that they may not be acting in your best interest. In most cases, the commission or handling fees of the loan intermediaries are paid by the lender. It is possible that the loan intermediary may only refer you to certain loan products with a higher commission rate for themselves, rather than loan products that may be more suited and advantageous to you. 
5. If the loan intermediary claims to be a representative of a bank or a government department, contact the relevant organisation and verify the identity and authority of the loan intermediary. 
6. If the loan intermediary seeks to charge any fee, request the loan intermediary to list out the amount of the fee, the scope of service involved, the method of calculation and the repayment period in writing and check with the lender if the loan intermediary is entitled to charge these fees. It may be the case that the lender has already paid these fees as a commission to the loan intermediary and the loan intermediary is seeking to double charge the borrower. 
7. If the offers made by a loan intermediary are too good to be true, then it probably is. Do not believe the offers or promises right away. 
8. Ask for a copy of all relevant documents for record-keeping purposes.