Name
Global FinTech Guide
Country _ Name
Hong Kong
SectionTitle
Loan services / factoring / loan broking / finetrading
Body
FinTechs belonging to this category act as a loan creditor (even short and very short-term loans), are broking loans or receivables or conduct factoring of loans, which were given to private or business customers. In this business area you also find “peer-to-peer” (P2P) services, in which FinTechs enable a multitude of users to give loans (and brokered by the FinTech-platform) to other users or companies.

Finetrading is hereby a financial service of FinTechs, where they buy due receivables and grant the debtor an extension of payment time.

As an ancillary service some FinTechs offer alternative credit assessment services to check the solvency of a borrower.

Introduction

Attitude of the country towards loan-giving-, factoring-, brokerage-, finetrading- and ancillary services

There is no known social or political issue in Hong Kong which would hinder such services. As at 31 January 2022, there were more than 2,400 licensed money lenders in Hong Kong. Licensed money lenders are currently governed and regulated under the Money Lenders Ordinance (“MLO”) in Hong Kong. 

Legal affairs

Obligations and requirements to provide loan-giving-, factoring-, brokerage-, finetrading, and ancillary services described above

To the extent such services constitute carrying on business as a money lender in Hong Kong, the service operator is required to obtain a money lender's licence under the MLO. The Registrar of Money Lenders, which is a function presently performed by the Registrar of Companies, is responsible for evaluating applications for money lenders licences, renewal of licences and endorsement on licences, as well as maintaining a register of money lenders for inspection by the general public. Further, the Commissioner of Police is responsible for enforcing the MLO, with roles including the examination of applications for money lenders licences, licences renewal and endorsements on licences; and processing and investigating complaints against money lenders. 

Requirements on how to obtain licences and comply with the relevant regulatory obligations and requirements under the MLO are available on the website: https://www.cr.gov.hk/en/services/money-lenders/publication-forms.htm

Additional comments regarding the legal situation for loan-giving-, factoring-, brokerage, finetrading-, and ancillary services or what FinTech’s must be aware of in this business area

Besides licensed money lenders, the following entities may also provide loans: authorized financial institutions (HKMA licensed) or securities margin financiers (SFC licensed). Further, under the Banking Ordinance, any person must be approved by the HKMA before acting as a money broker. A money broker means a person who, for reward, carries on the business in or from Hong Kong, or provides to persons in Hong Kong the service, of negotiating, arranging, or facilitating agreements between other persons: 

  • in respect of the making of deposits of any currency, any currency transactions, or any transactions of an instrument specified in a notice under the Banking Ordinance; and
  • one of which is an authorized institution; and as agent for, or as the provider of a dealing service to, not less than one of those persons.

Economic conditions

Market size for loan-giving-, factoring-, brokerage-, finetrading- and ancillary services and biggest companies in this business area

According to the Hong Kong Monthly Digest of Statistics on the Financial Services Sector in Hong Kong issued by Census and Statistics Department of the government, there are 1,022 establishments in the sector of financial leasing and credit granting as of 2020. Of these establishments, they

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