Financial Tips for Foreign Domestic Helpers (Part 1)
Browsing online forums related to foreign domestic helpers (FDHs), it's always come across employers complaining about FDHs using their home address and other information for loan applications. This sometimes leads to harassment or pursuit by financial companies or high-interest loan groups due to the FDHs failed to pay off debt. It's suggested that employers assist FDHs in understanding the importance of prudent financial management. In the meantime, understanding why FDHs accumulate debt is crucial as well. This article will share some financial management tips for FDHs.
Handling FDHs' Unauthorized Use of Employer's Mail for Loan Applications:
If an employer discovers that an FDH has used or stolen mail without authorization to obtain loans from financial companies, they can file a complaint with the Office of the Privacy Commissioner for Personal Data, citing improper behavior as grounds for termination. If termination isn't preferred, employers can discuss how to assist the FDH in resolving the issue, even considering lending money. However, it's recommended that employers fully understand the loan's terms and details. Aside from reviewing relevant documents, contacting the financial company may be advisable. If deciding to lend money to the FDH, all details must be clearly documented in writing, including names, loan amounts, repayment arrangements, etc., with signatures for verification. Subsequently, the most crucial aspect is to assist and educate FDHs in prudent financial management, especially considering that many are the primary breadwinners for their families. Regular communication and support can cultivate FDH loyalty, reducing turnover. There are surveys indicate that over 90% of FDHs have varying levels of debt.
Lack of Financial Literacy among FDHs:
Some financial companies specifically target FDHs lacking financial literacy, offering loans with simple procedures, attracting those with insufficient knowledge into borrowing. Without careful examination of terms and conditions, accumulating substantial debt is easy.
Training and Placement Fees:
During training, FDHs may incur fees from training institutions, and some companies charge high placement fees, leading to varying levels of debt for FDHs arriving in Hong Kong.
Recruitment Fees:
Certain agencies charge recruitment fees, forcing FDHs to resort to high-interest loans for repayment. Since FDHs may not provide proof for formal bank loans, they turn to licensed or unlicensed financial companies, further escalating risks.
Extended Repayment Periods:
As many FDHs financially support their families, they remit money home monthly, extending repayment periods and accruing higher interest. There's also a risk of harassment or threats from loan sharks, ultimately causing distress to employers.
After understanding these reasons and backgrounds, in part 2, we will suggest actions employers can take to help FDHs manage their finances prudently and reduce the likelihood of debt.
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The information provided in this article is for general reference only and should not be considered as any form of advice. Our company assumes no responsibility for its use
