Deep Dive delves into hot issues in Hong Kong and mainland China. Our easy-to-read articles provide context to grasp what’s happening, while our questions help you craft informed responses. Check sample answers at the end of the page.
News: How one person can fall victim to loan sharks in Hong Kong
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High interest rates on loans can lead people to borrow more money to cover their payments
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Many lending institutions use hard sell tactics or charge hidden handling fees
When his grandmother died, Hongkonger Fai Chan inherited her flat in eastern Kowloon valued at HK$3 million in 2023.
But first, he had to pay a HK$1.2 million premium to the Housing Authority. He did not have the money. That was the start of his journey into the world of borrowing at high interest rates and sinking deep into debt.
He had been shunned by banks due to a past bankruptcy. So he turned to two well-known finance companies for the money. Each lent him HK$600,000, and he paid the Housing Authority.
But their 40 per cent annual interest rate over 10 years meant he had to repay HK$22,000 a month, which swallowed almost his entire salary of HK$20,000 to HK$30,000.
The punishing monthly payments became unbearable, and he turned to smaller, less regulated lenders to borrow even more. Soon, he was juggling loans from six different places, all licensed lenders. He was taking on new debt to pay off his old ones.
Chan never missed a payment but lived in constant anxiety. His phone number was shared among lenders. These loan sharks bombarded him with offers of “help” if he needed more cash.
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“Over WhatsApp, they will say, ‘just come over and get money in 30 minutes’,” Chan recalled. “But once you get there, they will scrutinise your request and get all your information, your family’s telephone numbers too.”
He learned that hidden handling fees were the biggest trap. A borrower taking out a HK$10,000 loan might only receive HK$8,000 after a 20 per cent fee was deducted. However, they would still have to repay the full HK$10,000 plus interest.
The law prohibits lenders from charging fees over the stated interest rate.
Seeing him struggle, a friend lent Chan HK$180,000. The loan enabled him to break the cycle of borrowing and sinking deeper into debt. By then, Hong Kong’s property market had slumped. The value of his grandmother’s flat sank to HK$1.2 million.
He sadly gave up the flat he inherited, selling it for HK$1.8 million. After repaying his friend and settling his debts with the finance companies, he was left with virtually nothing.
Even now, his phone still occasionally buzzes with messages from lenders. Some falsely claim he still owes them money.
Looking back, he said he never would have accepted his inheritance if he had known the trouble it would bring.
Staff writers
Question prompts
1. According to News, which of the following is true?
(1) Chan had to borrow money because of a flat he inherited from his mother.
(2) At one point, Chan was dealing with loans from six places, none of which were licensed lenders.
(3) Lenders are not allowed to charge fees over the stated interest rate.
(4) Chan got out of debt after a friend lent him money.
A. (1), (3) only
B. (2), (3) only
C. (2), (4) only
D. (3), (4) only
2. Name at least TWO ways predatory loan companies manipulate their victims.
3. List ONE positive and ONE negative outcome based on how Chan’s experience with predatory loan companies ended.
Illustration
Question prompts
1. What is being depicted in this illustration, and how does it relate to the information in News?
2. Based on your own knowledge and what you learned in News, how did predatory lenders get the nickname “loan shark”?
Issue: Main targets of loan sharks and ideas for industry reform
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Elderly Hongkongers, gamblers and students have all been identified as victims of moneylending schemes
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Many have called for more industry regulation and tougher licensing requirements
Amid Hong Kong’s economic downturn, a growing number of residents have been driven into the web of moneylenders, many of whom operate outside the law.
Lawyer Lau Kar-wah said elderly residents may be targeted by financial intermediaries offering older homeowners a lower mortgage rate for their flats. These intermediaries encourage them to sign fabricated documents showing proof of income or cash flow and transfer their mortgage to another bank.
To get the money for their fabricated monthly income, the mortgagor would be asked to borrow from a lender at a high interest rate.
Lau said many of the victims were elderly people who wanted to help their children or low-income households whose properties were likely their main assets.
Terence Mok, a social worker at the Smart i-Change Gambling Counselling Service, said problem gamblers were also lured by ads for online loans that often charged interest rates of more than 48 per cent, after exhausting their credit cards and borrowing from family.
These unlicensed loan sharking operations used unregistered prepaid SIM cards or overseas numbers, making them nearly impossible to trace.
Innocent family members and friends sometimes end up harassed due to these debts.
Leung, who asked only to be identified by her surname, said she and more than 10 relatives found themselves targeted by debt collectors after a family member gave their names and personal details as “referees” on a loan application without their knowledge or consent.
Under the licensing conditions for money lenders, a referee cannot be held liable for a loan and must provide written consent. But in reality, debt collectors are known to hound family members and put pressure on the actual borrower.
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Emails were sent to their employers, stating their names, addresses and company details, and false claims that they had borrowed money.
“Shouldn’t the referee be informed ... for checking?” she asked. “These processes seem to be completely non-existent, and personal privacy has also been violated.”
Lawmaker Johnny Ng Kit-chong highlighted another predatory pipeline involving young people being duped by direct sales investment schemes.
He said scheme organisers would persuade students to “invest” in products by taking out high-interest loans, with false promises of being able to repay the debt quickly from the sales profits.
Hong Kong’s money lending industry is governed by the Companies Registry, but the city’s Consumer Council has long advocated for this system to be consolidated into a single, industry-specific regulator to improve governance.
Meanwhile, social worker Mok suggested the government tighten its licensing procedures, as some lenders who were denied renewals might open new ones.
Staff writers
Question prompts
1. According to Issue, which of the following is true?
(1) Loan sharks usually charge gamblers interest rates of less than 30 per cent.
(2) Predatory lenders go after students by enticing them to invest in products by taking out high-interest loans.
(3) Unlicensed loan sharks can be tough to trace because they often use overseas numbers or unregistered prepaid SIM cards.
(4) Under current regulations, if a moneylender is denied a license renewal, they cannot open a new one.
A. (1), (2) only
B. (2), (3) only
C. (3), (4) only
D. (1), (4) only
2. Using Issue, identify THREE groups of people targeted by loan sharks and ONE characteristic that unites these different groups.
3. List TWO measures that have been proposed to reform the moneylending industry.
Graph
Question prompts
1. What is being depicted in the graph?
2. What steps should the government take to address the issues presented in the graph? Explain using News, Issue and your own knowledge.
Glossary
bankruptcy: a legal process that helps a person or business who cannot repay their debts. Bankruptcy grants them relief by either wiping out what they owe or making a plan for them to pay over time. However, they may be forced to sell things they own, and it could be more difficult for them to get loans in the future.
interest rates: the amount you are charged for borrowing money – a percentage of the total amount of the loan. For example, if you borrow HK$1,000 at a 10 per cent interest rate, it means you will repay HK$1,100.
loan sharks: people or businesses that lend money but charge extremely high interest rates and may even use threats of violence to collect debts
asset: anything valuable that a person owns which can provide economic benefits in the future. Assets could include real estate, vehicles, personal belongings, cash savings, or stocks and bonds
direct sales investment schemes: business models that require people to buy products from a parent organisation and sell them directly to customers
Sample answers
News
1. D
2. One way loan sharks manipulate their victims is by bombarding them with messages and offers of “help”. Even after Chan paid off all his debts, loan sharks continued to contact and harass him, falsely claiming that he still owed them money. This can stress out vulnerable and unaware individuals.
Additionally, moneylenders collect all of a borrower’s contact information, as well as that of their family and friends, so they can harass others in the victim’s network.
Finally, loan sharks charge hidden handling fees, which take advantage of vulnerable individuals who lack the funds to repay their debts. They may resort to borrowing more money from other loan sharks to pay the fees, continuing the cycle.
3. A positive outcome for Chan was that he managed to break the cycle of borrowing and repaying, thanks to a friend lending him money. He was no longer in debt.
However, the value of the flat he inherited dropped by more than half, forcing him to sell it. Unfortunately, he was left with very little money after paying off his debts.
Illustration
1. This cartoon shows a man stranded on a boat surrounded by sharks. The man seems desperate to grab the money being handed to him by a ‘finance company’, as it says on the sleeve. This is a nod to the information in the news because the man is in a vulnerable situation and needs cash. He is willing to take the money from this so-called finance company. All the while, he is surrounded by sharks - which represent loan sharks - that are ready to prey on him.
2. Loan sharks likely got their name because sharks are predatory creatures that hunt their prey. Similarly, loan sharks also seek out vulnerable people, hunting them down and preying on their assets. (accept all reasonable answers)
Issue
1. B
2. According to Lau, loan sharks sometimes target the elderly, while Mok explains that they also target gamblers, and Ng notes that they also target students. While these three groups seem very different, they are similar in one way: they are vulnerable.
The elderly are particularly vulnerable to scams because they may not understand the details of the loans. Gamblers may be down on their luck after exhausting all other options for cash. Therefore, they are likely to be desperate and will resort to borrowing to repay their debts. Students are vulnerable because they likely do not have much money and may need to borrow funds to establish their lives and careers. They might not know how loan sharks and borrowing work.
3. The Consumer Council believes that the current system should be consolidated. Currently, the Companies Registry handles licenses, the police, and the Licensing Court. Consolidating these duties into a single, industry-specific regulator might create more fairness for lenders and borrowers, according to the Consumer Council.
In addition, Mok thinks that the government should tighten the reins on licensing. He reasoned that some lenders who are denied renewals might just open new ones.
Graph
1. This graph shows the number of complaints relating to money lenders in Hong Kong from 2018 to 2025. Although the trend is not steady, the primary concern is that Hong Kong is on track to record 112 complaints in 2025, given that there were 28 complaints in the first quarter of the year. This number is much greater than any other year.
2. The Hong Kong government needs to provide better education on the dangers of loan sharks. This information should be readily available to vulnerable groups that tend to use loan shark services. Lectures can take place at elderly community centres and universities. (accept all reasonable answers)
