Press Release
LCQ4: Credit card for young persons
Wednesday, June 30, 1999
Following is a question by the Hon Choy So-yuk and a reply by the Acting Secretary for Financial Services, Mrs Rebecca Lai, and Secretary for Health and Welfare, Mrs Katherine Fok, in the Legislative Council today (Wednesday):
Question :
It was reported that there has been an increase in recent years in cases which involved young persons committing suicide or attempting to commit suicide, due to their inability to repay debts to the credit card issuing institutions. In this connection, will the Government inform this Council:
(a) of the respective numbers of cases involving young persons between the ages of 18 and 25 committing suicide and attempting to commit suicide due to their inability to repay such debts over the past two years; and the number of cases in which the young persons concerned sought assistance from social workers due to their inability to repay;
(b) of the total number of complaints received over the past two years by the Consumer Council against credit card issuing institutions for issuing credit cards indiscriminately; the number of such complaints lodged by family members of the card holders; and the way the Consumer Council handled such complaints; and
(c) whether it will consider enacting legislation to prohibit credit card issuing institutions from issuing credit cards to young persons, such as students, who have no regular income?
Reply:
Madam President,
(a) During the period between April 1997 to March 1999, the Social Welfare Department has dealt with 24 attempted suicide cases of young persons between the ages of 18 and 25 which relate to inability to repay credit card debts. There were no recorded actual suicide cases involving young persons in the same age group who were unable to clear credit card debts. In the same period, 20 cases involving young persons aged between 18 and 25 who approached SWD for assistance relates to inability to repay credit card debts. The young persons involved in all the above cases are not students.
(b) The Consumer Council has not received any complaints against card issuers for issuing credit cards indiscriminately over the past two years.
(c) The prime target of the Government in monitoring the financial market is to ensure the soundness of the financial system. Furthermore, in order to establish an open financial market with free competition, the Government has been, as far as possible, refraining from interfering the market's operation. Therefore, the objective of supervision of financial institutions' credit business is to avoid the risk on financial institutions brought about by imprudent lending, which affects the systemic stability of the financial system. The debt arrangements of individuals with financial institutions, including credit card credits, are the commercial decisions of financial institutions. The Government considers that there is no need to legislate specifically to exercise control over this.
In order to promote good banking practices, the Hong Kong Monetary Authority (HKMA) and the Associations of the industry have made the Code of Banking Practice (the Code). The Code was issued jointly by the Hong Kong Association of Banks and the Deposit-taking Companies Association, which took effect from July 1997.
Section 22.1 of the Code sets out the guideline in relation to the issue of credit cards by authorized institutions to young persons (for example students):
"Card issuers should act responsibly in the issue and marketing of credit cards, in particular to persons (such as full time students) who may not have independen