Financing Companies Act

On May 22, 2025, the Legislative Yuan held a public hearing on the draft “Financing Companies Act,” bringing together scholars, experts, and regulatory agencies to discuss potential frameworks for the regulation of financing and leasing companies. Professor Chao-Hung Chen, Deputy Director of CIEL, was invited as a panelist to share his observations and recommendations.

Deputy Director Chen emphasized that before drafting a specialized law for financing companies, it is crucial to first clarify the underlying policy objectives. He noted that many social concerns—such as usury, fraud, and exploitative lending practices—are already addressed under existing laws, including the Civil Code, Criminal Code, Money Laundering Control Act, as well as the recently enacted “Four Anti-Fraud Laws.” He cautioned that if legislation targets only specific misconducts such as fraud, the result may be piecemeal and incomplete regulation. Worse, it could restrict the space for inclusive finance and drive those with genuine funding needs toward underground lenders.

Rather than hastily enacting a new specialized law, Deputy Director Chen suggested strengthening the use of existing legal and regulatory tools to enhance oversight of interest rates, disclosure requirements, borrower suitability, and fair trading practices. He recommended a gradual, evidence-based approach: observing market developments first, and only then determining whether a comprehensive and dedicated legal framework is truly necessary.

The complete record of the hearing is available at:
https://ppg.ly.gov.tw/ppg/SittingAttachment/download/2025051668/PPGB60500_2100_20988_1140603_0004.pdf