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Lobbying for capital-guaranteed zero-risk
The victim, Ms. Yang, complained that two years ago, a bank employee persuaded her to borrow HK$1 million from the bank to purchase savings insurance "premium financing" with attractive conditions of "zero risk and guaranteed principal" and high interest. The so-called "premium financing" means that the insured borrows money from the bank at a low interest rate, and then purchases savings insurance to earn high interest.
Therefore, Ms. Yang purchased a 5-year savings insurance policy worth HK$1 million through premium financing in January 2023. After five years of repayment, after deducting the bank loan and the principal of more than 70,000 yuan, Ms. Yang can still earn 70,000 yuan in interest. Unexpectedly, after paying for a year, Ms. Yang suddenly received a "Call Loan" from the bank, locking her account and requiring her to repay the 1 million loan in advance, catching her off guard!
It was only then that the victim saw clearly the clause in the contract that stated that the loan could be withdrawn at any time. Ms. Yang said that the bank staff did not tell her this clearly and accused the bank of being irresponsible.
Bank savings promotes "premium financing" policies
Recently, a victim was sold a "premium financing" policy by a bank savings agency, which claimed "capital protection + zero risk". She could use the money borrowed from the bank at a low interest rate to buy a savings policy and earn high interest. Therefore, the victim, Ms. Yang, purchased a 5-year "premium financing" policy and paid a principal of 70,000. However, more than a year after she had made the payment, the bank suddenly "called for a loan"!
Bank quickly "Call Loan" to freeze the victim's account
After Ms. Yang had paid for her loan for more than a year, the bank suddenly called her for a loan in October last year. She also received a credit review notice, which stated that the bank might not lend money to Ms. Yang and that she might be required to repay the 1 million yuan immediately at any time.
She then inquired with the bank staff, but received a response that the bank staff knew nothing about the matter. Her account was frozen the following week and she was asked to repay the money immediately!
Click to see the bank's communication with the victims
Two days later, Ms. Yang found that she could not transfer money and her bank account was frozen. A week later (January 15), she was asked to terminate her account and repay the money immediately. The bank said that the policy expired on the 18th and she had to repay by cheque before then, otherwise she would be charged 10% interest.
Experts have also been persuaded by banks to buy products that say they can get a return of 4% by borrowing 2%. However, premium financing does not guarantee an ideal return; borrowing money comes with floating interest rates and can result in losses at any time.
HKMA: At least 30 days’ notice
In response to the incident, the HKMA stated that when banks handle account operations or terminate any banking relationships, they need to follow the terms and conditions signed by customers, requiring banks to explain to customers where appropriate and not in violation of the law and to give at least thirty days' notice in advance. Banks should have mechanisms in place to review decisions to close accounts upon request by customers.
The banks involved responded that they would review and adjust relevant services under specific circumstances, including cancelling premium financing. They would also provide advance notice in compliance with legal requirements and give customers reasonable time to make alternative arrangements.
