On Nov. 8, HKMA launched cooling-off period for consumer credit.
HKMA sent requirements to retail banks, including digital banks, to implement cooling-off period for unsecured consumer credit products to promote responsible borrowing.
Implementation
The cooling-off period allows individual customers to reconsider their financial obligations and repayment capacity after entering a credit agreement.
Retail banks must offer a minimum 7-day cooling-off period during which customers can repay or redeem loans in full without providing reasons or incurring fees.
No handling fees, prepayment penalties, or hidden charges are allowed during the cooling-off period, and interest rates for repayment must not exceed standard rates.
Banks must provide accessible, timely, and efficient channels for loan repayment during the cooling-off period and process customer requests promptly.
Required to clearly disclose cooling-off period's terms, including duration, fees, interest payable, repayment channels, in prominent manner during loan application/approval.
Banks are encouraged to have their subsidiaries offering unsecured credit products follow these requirements, and other FIs should consider adopting similar measures.
Effectiveness
Retail banks must review, update systems to comply with new requirements by end of Jun. 2025, with flexibility for banks facing implementation challenges to consult HKMA.
