Card abusers sue financial regulator

By Amber Chung  /  STAFF REPORTER

Sat, Feb 25, 2006 - Page 10

A group of debt-ridden credit and cash card borrowers yesterday sued the nation's financial regulator for allegedly failing to rein in banks' irresponsible issuance of credit products and poor credit checks.

Accompanied by Chinese Nationalist Party (KMT) Legislator Shyu Jong-shyong (徐中雄), as many as 55 debtors yesterday filed a lawsuit against Kong Jaw-sheng (龔照勝), chairman of the Financial Supervisory Commission, and Gary Tseng (曾國烈), director-general of the commission's Banking Bureau, at the Taipei District Prosecutors' Office.

Both Kong and Tseng were accused of failing to control "irresponsible" issuance of credit and cash cards, excessive interest rates and improper and violent debt collection activities.

Representing those heavily in debt, Liu Bao-cheng (劉寶成) with NT$3 million in debt, said his monthly wage of NT$30,000 could barely cover his monthly interest payments of NT$25,000, a local cable TV station reported yesterday.

In response, the commission said in a statement yesterday that it respects people's right to file lawsuits. But the commission stressed that it did not neglect its duties and had carried out a series of measures to help borrowers negotiate with banks over debt repayment and facilitate a "soft landing" for the banking sector.

The financial watchdog said it had demanded that banks improve their credit control.

In addition, the Bankers Association (銀行公會) last month began offering debtors a card debt negotiation mechanism that provides reduced interest rates at a minimum of 3.88 percent, compared with the 20 percent revolving rate levied on credit or cash cards, and longer payback terms of up to 80 months.

From Jan. 1 to Feb. 18, the mechanism received 11,946 applications and has wrapped up 7,323 cases. Up to 5,841 of the completed cases reached an agreement on a payback plan, representing a success ratio of 80 percent and total debt of NT$10 billion (US$308 billion), the commission said earlier this week.

However, Shyu said that only about 10 percent of card debtors were relieved through the mechanism, while many heavily indebted borrowers still have to suffer their snowballing debts due to the tight qualifications on entering the bail-out system.

The commission — which received 403 phone calls on the 20 help lines it launched Thursday — said it will monitor the follow-up on some 147 calls complaining about the debt negotiation mechanism.