Hong Kong’s domestic helpers have easy access to unsecured loans from licensed money lenders. But they are often in no position to repay them. Many end up being sucked into a damaging spiral of debt. There is a need for tighter regulation.

The government’s measures to strengthen rules for the sector to combat “excessive borrowing” among low-income workers will help tackle the problem. They are a step in the right direction.

Monthly repayments for unsecured personal loans to such borrowers will be restricted. They will be capped at 35 per cent of income for people earning HK$6,000 a month or less and 40 per cent for those on salaries of HK$6001 to HK$12,000. The new requirement, from August 1, should ensure people taking out loans are much better equipped to repay them.

A ban will be imposed on money lenders requiring applicants to provide referees. This is to prevent friends or employers of the borrowers from being targeted by debt collectors. It is a sensible step.

From June next year, lenders with customers whose monthly income is below HK$12,000 or those with unsecured loans totalling HK$50 million or more will be required to join the Credit Data Smart system. All offering unsecured loans must regularly submit borrower data to the platform.

These moves will strengthen the system by providing a clearer picture of a loan applicant’s total liability across different lenders. It should enable better decisions to be made on the ability of a borrower to repay.