Hong Kong’s First-Phase Money Lender Measures Are Now Effective: Immediate Compliance Checks

First-phase measures have been effective since 1 August 2026

The Government confirmed that the first-phase measures to enhance regulation of licensed money lenders took effect on 1 August 2026. These measures include an additional licensing condition and two revised conditions under the Guidelines on Licensing Conditions of Money Lenders Licence.

The changes focus on excessive borrowing, particularly unsecured personal lending to low-income earners, the use of loan referees and potentially misleading advertising. Licensed money lenders should now confirm that the required operational, documentation, system and staff-training changes are implemented and evidenced.

1. DSR caps for unsecured personal loans to low-income earners

For this condition, a low-income earner is an intending borrower or borrower with monthly income of HK$12,000 or less. Before granting an unsecured personal loan, the lender must ascertain the borrower’s Debt Servicing Ratio (DSR), calculated as total monthly repayment obligations for unsecured personal loans — including the new loan — divided by monthly income.

The applicable caps from 1 August 2026 are:

• Monthly income of HK$6,000 or less: DSR must not exceed 35%.
• Monthly income from HK$6,001 to HK$12,000: DSR must not exceed 40%.

A lender must not grant the loan if the resulting DSR exceeds the applicable cap. Where a low-income borrower works under a fixed-term employment contract, the loan repayment period must not exceed the remaining term of that contract. The lender must retain written, video or audio records showing compliance.

Where income is not fixed, the Guidelines require the lender to calculate average monthly income using income records from the latest three months or 12 months, whichever produces the higher average. Current income must be used; an expected future increase must not be included.

2. Loan referees can no longer be requested

From 1 August 2026, licensed money lenders must not ask intending borrowers to provide referee information, or obtain such information from them, for loan applications. Application forms, scripts, online journeys and third-party procedures should therefore be revised.

For referee information supplied on or before 31 July 2026, the lender must immediately cease using it and must not contact the referee for any purpose connected with the money-lending business. A referee has no legal or moral obligation to repay the borrower’s loan.

3. Advertising controls are tightened

Money-lending advertisements must be fair, reasonable and non-misleading. The revised Guidelines give practical examples of problematic claims. In particular:

• A maximum personal-loan amount should not be advertised without identifying the types of personal loans and categories of borrowers to which it applies, where omission would be misleading in light of the DSR caps.
• Advertisements should not state or imply that an unsecured personal loan is guaranteed, pre-approved or available without credit checks or assessment of the borrower’s financial position.
• Advertisements should not overstate how easy it is to borrow or repay.

Existing statutory and licensing requirements — including displaying the money lender’s licence number and the prescribed risk-warning statement — continue to apply.

Second phase is scheduled for 1 June 2027

The Government stated that the second-phase measures will be rolled out on 1 June 2027. They will require all money lenders engaging in unsecured personal-loan business to regularly submit borrowers’ personal credit information to Credit Data Smart (CDS). Money lenders will also need to meet specified requirements to join CDS before obtaining borrowers’ personal credit information for loan-application assessment. These second-phase measures are scheduled and are not yet effective.

Immediate compliance checklist

Licensed money lenders should consider the following actions:

1. Update credit policies and system rules for the HK$12,000 low-income threshold and the 35%/40% DSR caps.
2. Ensure total unsecured-loan repayments across relevant institutions, including the proposed loan, are captured in the DSR assessment.
3. Add fixed-term employment-contract checks and repayment-tenor controls.
4. Implement the required written, video or audio compliance records and retention procedures.
5. Remove referee fields and related consent/contact steps from paper forms, websites, apps, call scripts and intermediary workflows.
6. Stop using existing referee information from 1 August and restrict access where necessary.
7. Review advertisements, social-media content, landing pages and sales scripts for guaranteed, pre-approved, no-check or easy-repayment claims.
8. Train frontline, credit, marketing, compliance and third-party personnel, and retain evidence of the training and implementation review.

HKBSCL can assist businesses with compliance-process reviews, accounting and record-keeping arrangements, internal-control documentation and operational readiness. Legal interpretation of individual licence conditions should be obtained from a qualified legal adviser where necessary.

Official sources

• Hong Kong SAR Government, “First-phase measures to enhance regulation of licensed money lenders take effect today” (1 August 2026): https://www.info.gov.hk/gia/general/202608/01/P2026073100777.htm
• Companies Registry, “What’s New”: https://www.cr.gov.hk/en/about/news/highlights.htm
• Guidelines on Licensing Conditions of Money Lenders Licence (April 2026; effective from 1 August 2026): https://www.cr.gov.hk/en/publications/docs/Conditions_ML_e_Apr2026.pdf

This article is for general information only and does not constitute legal, accounting, tax or other professional advice. Businesses should review the official Guidelines and obtain advice appropriate to their circumstances.