Hong Kong Monetary Authority - FAQs (2024)

Individual banks are required to develop their own account opening procedures taking into account all relevant legal and regulatory requirements, including but not limited to the Anti-Money Laundering and Counter Terrorist Financing Ordinance (Cap. 615), and Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Authorized Institutions), as well as the Code of Banking Practiceand their own business strategies.

AEOI stands for Automatic Exchange of Financial Account Information. It refers to the automatic exchange of financial account information in tax matters, aiming at improving transparency in the fight against tax evasion and in so doing protecting the integrity of the tax systems of the participating jurisdictions. In Hong Kong, the relevant legislative framework for implementation of AEOI is laid down in the Inland Revenue Ordinance.

In view of the implementation of the AEOI arrangement in Hong Kong, which also affects bank customers, the HKMA has worked with and guided the banking industry in developing an AEOI Fact Sheet which aims at addressing likely questions that bank customers may raise. The Hong Kong Association of Banks (HKAB) and the Private Wealth Management Association (PWMA) have published on their respective websites the AEOI Fact Sheet developed by the banking industry. The contents of the Fact Sheet are for general reference purposes. Relevant hyperlinks to HKAB’s and PWMA’s websites are as follows.

• HKAB's website
• PWMA's website

If you wish to learn more about AEOI, you may also refer to the following webpages providing general information on the subject:

• Inland Revenue Department’s AEOI webpage
• Organisation for Economic Cooperation and Development’s AEOI portal

FATCA is a United States (US) legislation that aims at combatting tax evasion by US persons holding accounts and other financial assets outside the US. In view of this new development which also affects bank customers, the Hong Kong Monetary Authority has worked with the Hong Kong Association of Banks (HKAB) to enhance the industry association’s previous efforts in developing a FATCA fact sheet. You may visit the following webpage to view the updated FATCA fact sheet developed by HKAB. The contents of the FATCA fact sheet are for general reference purposes.

If you wish to learn more about FATCA, you may also refer to the following webpages providing general information on the subject:

• A press release issued by the Financial Services and the Treasury Bureau (FSTB) on 13 November 2014 titled “HK and US sign agreement to facilitate compliance with FATCA by financial institutions in HK”
  http://www.fstb.gov.hk/fsb/ppr/press/doc/pr131114_e.pdf
• “US FATCA Intergovernmental Agreement - Frequently Asked Questions” issued by the FSTB
  http://www.fstb.gov.hk/fsb/topical/doc/fatca-faq2_e.pdf
• FATCA webpages of US Department of the Treasury
  https://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA.aspx
• US Internal Revenue Service FATCA page
  https://www.irs.gov/businesses/corporations/foreign-account-tax-compliance-act-fatca

As an international financial centre, Hong Kong attaches great importance to safeguarding the integrity of its financial systems by implementing Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) regime which meets international standards.

The banking sector, as a gatekeeper of the financial system, plays an important role in that regime. The HKMA has developed relevant policies and provided guidance to banks in establishing AML/CFT Systems, which includes preventive measures such as customer due diligence (CDD), transaction monitoring and record keeping, for identifying and appropriately mitigating ML/TF risks. When conducting CDD, banks collect information/documents from customers and reliable sources at account opening and on periodic basis thereafter to identify and verify their customers and develop an understanding of normal and expected banking activities of individual customers for ongoing monitoring of any abuse of banking services or illicit fund flows.

Customers can contribute to the efforts in the fight against crime by providing accurate and up-to-date information upon request by banks. Such cooperation will not only help banks in meeting their legal and regulatory obligations and safeguarding the integrity of the financial system in Hong Kong, but also help protect bank customers from becoming the victims of fraud and other criminal activities.

Banks adopt a risk-based approach in conducting AML/CFT work, which recognises that risks of different customers and different banking services are different, and thus CDD and risk mitigating measures adopted by banks should be proportionate to the risk level and not to bring undue burden on the customers. More information can be found on the FAQs Section about Account Opening and Operation.

The HKMA is the government authority responsible for promoting the general stability and effective working of the banking system. The HKMA supervises licensed banks, restricted licence banks and deposit-taking companies (collectively referred to as banks). The HKMA expects banks to take reasonable steps to handle complaints fairly, consistently and promptly.

Legitimate public complaints assist the HKMA in identifying issues of supervisory or enforcement concern that require follow-up action, including initiating an investigation and taking supervisory and enforcement actions.

Please note, however, that the HKMA cannot interfere with a bank’s commercial decisions, adjudicate or intervene in service quality issues or a dispute between a bank and its customer, or order a bank to pay compensation.

The HKMA’s focus is on whether the bank has handled your complaint properly and addressed your concerns, while in parallel, monitoring any potential breach of relevant regulatory requirements.

You may consider filing a complaint with the HKMA when:

• you suspect misconduct on the part of the bank and/or its staff;
• the bank refuses to handle your complaint;
• the bank does not handle your complaint in a fair manner or its reply does not fully address your complaint; or
• you have not received a final reply from the bank within 30 calendar days (up to 60 calendar days for complicated cases).

The HKMA does not have the power to order banks to pay compensation.

If your complaint is about a monetary dispute, you may consider using the mediation and arbitration services provided by the Financial Dispute Resolution Centre (FDRC). The FDRC provides financial consumers with an independent and affordable avenue, as an alternative to litigation, for resolving some monetary disputes with financial institutions.

You can visit the FDRC website atwww.fdrc.org.hk or call its hotline at 3199 5199 to find out more.

You can also consult a lawyer about your dispute.

The HKMA will not complete a complaint form for complainants.

Under special circ*mstances where persons with disability are not able to fill out the complaint form without assistance, the HKMA will provide special assistance. Please call 2878 1378 for an appointment at our office. An HKMA staff member will meet with the person with disability and provide assistance to complete the complaint form.

When a duly completed complaint form is submitted online, an acknowledgement email, which provides a case reference number, will be generated by the system. The HKMA will then send a preliminary response within 10 working days, advising whether the HKMA will take up your complaint.

If the complaint form is incomplete, the HKMA may contact you to obtain the missing information. An incomplete complaint form may affect our handling of your complaint.

After the HKMA takes up a complaint, we will review all relevant information available. Generally, as part of the HKMA’s complaint handling, if the case involves business relationship and/or contractual agreements between you and the bank concerned, we may refer your complaint to the bank for its further review, including where you may have already made a formal complaint to the bank earlier. The HKMA will ask the bank to provide you with a detailed reply within 30 calendar days* in response to your allegations. The bank is also required to send to the HKMA a copy of its reply to your complaint for the HKMA’s review.

We may also obtain further information from the bank in relation to your complaint.

The flowchart at the “Complaints about Banks” section on the HKMA’s website may help you understand how the HKMA handles complaints.

* Up to 60 calendar days is allowed for more complicated cases. However, the bank should provide you with an interim reply within 30 calendar days explaining why a longer period is required.

The HKMA will review the bank’s reply, and if the HKMA considers that the bank has not adequately addressed your concerns in its final reply, the HKMA may require the bank to give you a further reply.

Not all complaints will lead to supervisory or enforcement actions. If in the course of complaint handling, the HKMA identifies supervisory or enforcement concerns, we will follow up with the bank concerned or initiate an investigation. The HKMA may take enforcement action where there are sufficient grounds for doing so. Where appropriate, the HKMA may also refer the complaint to the relevant regulators or enforcement agencies to consider appropriate action.

In any event, we will let you know in writing in due course the outcome of HKMA’s handling of your complaint. If the complaint handling process cannot for any reason be completed within a short period of time, we will give you a brief update on the progress every six months. We will endeavour to explain relevant considerations in relation to the outcome of the HKMA’s handling of your complaint case. However, please note that the HKMA and its staff are subject to secrecy obligations under the Banking Ordinance with respect to information obtained in the course of exercising the HKMA’s functions. For this reason, the HKMA cannot provide you with private information about banks (e.g. supervisory actions, investigations) obtained in the course of handling a complaint.

Not all complaints will result in the HKMA taking supervisory or enforcement actions (e.g. if the complaint relates to a purely commercial matter or the bank has handled the complaint properly or the complaint is not substantiated in our view). The HKMA’s assessment is made on the basis of all information on hand and its outcome is final. The HKMA will only consider a request for review of a case made with valid grounds (e.g. new substantial supporting information), and in such a case, you may set out such information to the HKMA in writing. The HKMA will review all relevant information provided by you and the bank concerned. We will advise you the outcome of our handling of your complaint in writing.

In any event, the HKMA’s assessment will not affect your legal rights and you can, if you wish, further pursue your complaint through other avenues, such as civil proceedings.

If a complainant persists in pursuing his/her complaint after being notified of the HKMA’s assessment outcome but without providing any new and relevant supporting information/evidence, the HKMA may not respond to further correspondence from the complainant on the matter. The HKMA will give advance notification to the complainant on such arrangement and the reasons behind in writing.

If you are not satisfied with the way in which the HKMA or its staff has handled your banking complaint, you may write to the Enforcement and AML Department of the HKMA (at 55/F, Two International Finance Centre, 8 Finance Street, Central, Hong Kong) specifying the reasons why you are not satisfied (e.g. delay in response, failure to observe professional standards of competence and behaviour). The HKMA will handle the matter in accordance with our established procedures and will inform you of the result. However, this review does not cover disagreement with the HKMA’s assessment outcome, or the staff who recommended the outcome, in respect of your complaint. The HKMA’s assessment outcome is final.

If you suspect maladministration on the part of the HKMA, you may consider making a complaint to the Office of the Ombudsman, Hong Kong. Information about the role of the Ombudsman is available at www.ombudsman.hk .

You may have to bear the loss if your credit card has been used for an unauthorised transaction before you reported to the card issuing bank that your card or personal identification number (PIN) has been lost or stolen or that someone else knows the PIN. You may also be held liable for the losses if you have acted fraudulently, with gross negligence or have failed to inform the card issuing bank as soon as reasonably practicable after having found that your card has been lost or stolen. This may apply to losses caused by your failure to follow the measures which you should take to safeguard your card or PIN as advised by the card issuing bank.

Provided that you have not acted fraudulently, with gross negligence or have not otherwise failed to inform the card issuing bank as soon as reasonably practicable after having found that your card or PIN has been lost or stolen, according to the Code of Banking Practice, the maximum liability for such credit card loss should be confined to a limit specified by the card issuing bank, which should not exceed HK$500. The application of this limit is confined to loss specifically related to your credit card account and does not cover cash advances.

Generally speaking, where consumers use credit cards to make lump-sum payments for goods and services and have disputes over the transactions later on (e.g. the service purchased is not available as the merchant has gone out of business, the goods purchased do not match the description, etc.), consumers can request for refunds of their payment through the credit card chargeback mechanisms of the respective credit card associations.

Consumers may apply to their card issuing banks to raise chargeback (i.e. refund) requests against the disputed transactions. After obtaining the details of the disputed transactions from consumers, the card issuing banks will, through the credit card associations and in accordance with their rules and criteria, raise disputes and chargeback requests for the consumers against the relevant transactions to the merchant acquirers. Consumers may check with the card issuers about application procedures for raising chargeback requests and the chargeback processes of respective credit card associations. The general (simplified) process flow of the chargeback mechanism is shown in the attached diagram.

Diagram: General (simplified) process flow of the chargeback mechanism

Notes (5-8): A merchant acquirer or a merchant may, in accordance with the rules of the respective credit card association, accept or reject a chargeback request. Where the merchant acquirer or the merchant rejects the chargeback request but the card issuing bank or consumer does not agree with the decision, the card issuing bank may in accordance with the rules of the respective credit card association submit the disputed transaction to the credit card association for arbitration.

Consumers should note that, chargeback requests raised by card issuing banks on customers’ behalf are subject to the rules of the respective card associations (including the chargeback time limits within which consumers must file the requests, information showing a dispute is valid, etc.). Chargeback requests which do not fulfil the relevant requirements may be rejected. Consumers can visit the webpages of card issuing banks for relevant information or directly contact the card issuing banks to understand the details of chargeback protection and the relevant rules that may apply to a specific credit card transaction.

According to the Code of Banking Practice(CoBP), banks should require their debt collection agencies not to employ harassment or improper debt collection tactics.

If you find the tactics used by the debt collection agency not in line with requirements as specified in the CoBP, you can make a complaint to the bank (see list of banks’ contact persons for handling customer complaints). If you are not satisfied with the manner in which the bank handles your complaint, you may seek help from our Complaint Processing Centre (see FAQs - Complaints About Banks).

Yes. According to the Code of Banking Practice, banks should give the customer advance written notice (sent to the last known address of the customer) of their intention to commission a debt collection agency to collect an overdue amount owed to the bank. The written notice should include the following information: -

• the overdue amount repayable by the customer;
• the length of time the customer has been in default;
• the contact telephone number of the bank’s debt recovery unit which is responsible for overseeing the collection of the customer’s debt to the bank;
• the extent to which the customer will be liable to reimburse the bank the costs and expenses incurred in the debt recovery process (if the bank requires the customer to indemnify it for such costs and expenses); and
• that the customer should in the first instance report improper debt recovery actions taken by the debt collection agency to the bank.

Generally speaking, the right of banks to take recovery measures depends on their contractual agreements with borrowers.

Please note that the above information shall not constitute a legal advice from the HKMA. You are suggested to consult your legal advisor as deemed appropriate.

Conventional deposits with Scheme members denominated in any currency (e.g. deposits in savings and current accounts, and time deposits with a term not more than five years) are protected by the DPS, whether they are held by an individual or a company. Secured deposits are also covered. However, structured deposits, time deposits with an original maturity exceeding five years, bearer instruments, offshore deposits and non-deposit products are not protected by the DPS.

To find out more about the DPS, please visit the website of the Hong Kong Deposit Protection Board (the Board) (http://www.dps.org.hk) or contact the Board (Tel: (852) 1831 831; E-mail: dps_enquiry@dps.org.hk).

Banks in Hong Kong are required to have in place adequate security controls over their Internet banking services. According to SPM TM-E-1 on “Risk Management of E-banking” issued by the HKMA in 2015, one of the important security measures is that banks are required to notify their customers immediately via an effective alternative channel such as SMS message after completing an online high-risk transaction, and the notification message should contain the transaction details.

This notification mechanism is aimed at facilitating the customers in detecting any suspected unauthorised transactions so that they could report them to their bank immediately for prompt actions e.g. suspending the funds from being transferred to overseas account (where possible). Notification through SMS messages is considered to be more timely and effective. As such, banks in general will require their customers to provide their mobile phone numbers to the banks if the customers choose to enroll in Internet banking services for conducting high-risk transactions.

Alternatively, if customers choose not to provide mobile phone numbers to the banks, the customers could still conduct the high-risk transactions through other channels such as at branches or by post (where appropriate).

Further information and advice on Internet banking safety may be found on the “Smart Consumers” webpage.

According to the Supervisory Policy Manual on General Principles for Technology Risk Management and related circulars issued by the HKMA, banks are required to implement adequate IT controls to ensure confidentiality and integrity of information, and to protect the information in accordance with the level of risk present and envisaged. In particular, banks are required to protect confidentiality of customer data. Some of the banks may require their customers to log in their Internet banking accounts to access the monthly e-statements. The customer login process at Internet banking can be used as a way to authenticate the identity of the customer, and therefore protecting the customer information (including e-statements) stored at the bank’s systems.

The HKMA adheres great importance to data security particularly customer data protection and will continue to work with the banking industry to monitor the developments and trend of technology and information security, and strengthen the security measures, where appropriate, to protect the integrity and confidentiality of customer information.

Further information and advice on Internet banking safety may be found on the “Smart Consumers” webpage.

The HKMA's supervisory objective is to establish and maintain a safe and sound environment for the development of e-banking in Hong Kong without standing in the way of progress. The HKMA believes that maintaining technology neutrality is crucial for allowing banks to have the flexibility to choose and implement technologies that are appropriate to their e-banking services. Nevertheless, banks are required to adhere to the "fit for purpose" principle when implementing the system i.e. the technical implementation of the security measures and other controls adopted by banks for their electronic banking systems is required to be commensurate with the risks associated with the types and amounts of transactions allowed, the electronic delivery channels adopted and the risk management systems of individual banks.

As such, in respect of two-factor authentication, banks are required to select reliable and effective authentication techniques to authenticate the identity and authority of their e-banking customers. In general, banks are required to employ stronger customer authentication for authenticating their customers' transactions with higher risk. Banks need to evaluate carefully other aspects, including whether a particular authentication method is sufficiently mature.

Banks are expected to continue to review their security measures in place and to enhance the controls where appropriate on an ongoing basis, taking into account the trend and development of e-banking and information security.

Further information and advice on Internet banking safety may be found on the “Smart Consumers” webpage.

We suspect that you have encountered a fraud case. The HKMA is the banking regulator in Hong Kong and we have no relationship with any kind of lottery activity.

In addition, according to Article 112 of the Basic Law, "No foreign exchange control policies shall be applied in the Hong Kong Special Administrative Region. The Hong Kong dollar shall be freely convertible. Markets for foreign exchange, gold, securities, futures and the like shall continue. The Government of the Hong Kong Special Administrative Region shall safeguard the free flow of capital within, into and out of the Region." It means that there is no restriction on transfer of money in Hong Kong and the government does not demand for any kind of charges on money transfer.

If you suspect that fraudulent activities are involved, you may wish to report the case to the local police station or the Commercial Crime Bureau of the Hong Kong Police Force direct.

O2The Hong Kong Association of Banks, in consultation with the HKMA, has issued a new guideline on “Handling procedures for Following up Mis-transfer of Funds”. Which fund transfer channels is the guideline applicable to?

You may wish to refer to Section 6: Exchange rates and interest rates of the Monthly Statistical Bulletin.

The Securities and Futures Commission, as the lead regulator of the securities market, is responsible for setting the standards, through rules, codes and guidelines issued under the Securities and Futures Ordinance; while the HKMA acts as the frontline supervisor of the securities business of banks and ensures that banks and their staff conduct the sale of investment products in accordance with the relevant regulatory requirements and standards.

The HKMA is responsible for the day-to-day supervision of banks’ securities activities. The supervisory approach includes issuing circulars and guidelines, conducting regular on-site examinations to check banks’ compliance, and performing off-site surveillance such as analysing the results of periodic returns and surveys submitted by banks.

Having regard to market developments and the growing public expectations for better protection of retail banking customers, the HKMA has required retail banks to implement a number of investor protection measures for retail banking customers, including the following:

• audio recording of customer risk profile assessment and face-to-face sale process that involves complex products, or recommendation or solicitation of risk-mismatched simple products;
• physical segregation of investment activities from deposit-taking activities in retail bank branches;
• mystery shopping exercise to test check sale practices;
• pre-investment cooling-off period for derivative products (excluding investment funds) that are not listed on an exchange in Hong Kong and for debentures that are not listed on an exchange in Hong Kong and have any of the following features (extendable, with loss-absorption feature, exchangeable, and/or convertible); and
• Important Facts Statement to provide clear and concise summary of key product features and risks of currency-linked and interest rate-linked investment products.

In view of the differences in nature of clientele and mode of operations of private banking business, the HKMA allows flexibility for the private banking industry to comply with regulatory requirements and standards governing sale of investment products whilst according protection to investors.

Banks should properly disclose and explain the key features and risks of the investment products, including the name of the product issuer, and any fees and charges applicable to customers, to help customers understand the associated risks and costs before investing in the products.

When selling funds, investment-linked assurance schemes and unlisted structured investment products to the public in Hong Kong, banks are required to provide customers with Product Key Facts Statements which summarise the key features and risks of a product. For currency-linked instruments and interest rate-linked instruments issued by banks, banks should provide Important Facts Statements to retail banking customers purchasing these products.

Banks should also provide customers with a copy of the rationale for their investment solicitations or recommendations upon customers’ request.

For sale of investment products to vulnerable customers, banks should implement additional precautionary measures such as the following:

• Retail banks should allow them to choose during the initial transaction whether they would like to bring along a companion to witness the sale process, and / or have a second frontline staff to handle the sale; and
• Banks should advise them to avoid hasty decisions.

Regarding the sale of (i) derivative products (excluding investment funds) that are not listed on an exchange in Hong Kong; or (ii) debentures that are not listed on an exchange in Hong Kong and have any of the following features (extendable, with loss-absorption feature, exchangeable, and/or convertible), banks should give inexperienced customers who are elderly or with high asset concentration a pre-investment cooling-off period (i.e. at least two calendar days) to understand the products, consider the appropriateness of the investment, and if necessary, consult family members and friends before placing an order.

No, the Pre-Investment Cooling-off Period (PICOP) arrangement is applicable only to the sale of derivative products (excluding investment funds) that are not listed on an exchange in Hong Kong and debentures that are not listed on an exchange in Hong Kong and have any of the following features (extendable, with loss-absorption feature, exchangeable and/or convertible).

Under the PICOP arrangement, banks are required to give inexperienced customers who are elderly or with high asset concentration, at least two calendar days to understand the products, consider the appropriateness of the investment, and if necessary, consult family members and friends before order placement. For details, you may refer to section (A)(II.6) of the circular "Investor Protection Measures in respect of Investment, Insurance and Mandatory Provident Fund Products" issued by the HKMA to banks on 25 September 2019.

In order to ensure investment recommendations or a complex product(s) are suitable for you, banks are required to seek and take into consideration your relevant information including investment objectives, investment experience and knowledge, financial situation, investment horizon and risk tolerance, etc. A common way to collect and document such information is by conducting a customer risk profile assessment generally in the form of questionnaire. If disclosure by you is limited and as a result the bank is unable to make that assessment properly, this would result in limitation of the bank’s service that could be provided to you. It is therefore important that bank customers should provide accurate and up-to-date information for banks to ensure the suitability of investment recommendation or solicitation, or a complex product(s) is reasonable in all the circ*mstances.

You do not need to complete a risk profile assessment before conducting each and every transaction. If you have already completed an assessment with the bank before and the results are still valid (validity usually lasts for one to two years depending on different banks’ policies), the bank can proceed to recommend suitable investment product(s) or assess whether a complex product is suitable to you without carrying out risk profile assessment again. If you have significant changes in relevant information, you should inform the bank as soon as possible so as to update your risk profile assessment.

Audio-recording is an important investor protection measure. Audio-recording the risk profile assessment and the selling process can help ensure such processes are properly conducted (e.g. to guard against misrepresentation or omission in the profiling and risk disclosure processes). The audio record can also serve as important evidence in any customer complaints or disputes, and can facilitate regulators’ supervision of the business conduct and investigation of any customer complaints.

Not every risk profile assessment nor every purchase of an investment product requires audio-recording. While banks are required to audio-record the first-time face-to-face risk profile assessment process for retail banking customers, banks may provide other risk profiling channels, such as online assessment where audio-recording is not required. Also, banks may conduct subsequent regular review of customer risk profile online or via written confirmation with customers, where audio-recording is not applicable.

In general, banks do not need to audio-record face-to-face selling process of investment products for retail banking customers, unless the process involves complex products (e.g. complex bonds, and investment products with derivatives), or recommendation or solicitation of risk-mismatched simple products.

A bank may recommend a customer to buy an investment product with risk-mismatch, if it is suitable to the customer. For example, it may be suitable for a customer with a low or medium risk profile to buy a high risk investment product if the product only constitutes a small portion of the customer’s portfolio and could likely meet the investment objectives and other circ*mstances of the customer.

Where a bank advises or alerts you that an investment product is unsuitable for you, you should think twice on whether to purchase the product.

In general, a bank can execute an investor’s purchase order for a specific simple product without involving investment recommendation or solicitation from the bank.

If an investor’s purchase order involves a complex product (other than certain exchange-traded derivative products or non-leveraged currency-linked or interest rate-linked deposits with standardised features), a bank is required to ensure that (i) the product is suitable for the investor in all circ*mstances before executing the order, irrespective of whether there is solicitation or recommendation from the bank; (ii) provide sufficient information on the key nature, features and risks of the product to enable the investor to understand the product before making an investment decision; and (iii) provide prominent and clear warning statement(s) to the investor about the complex product.

Besides, if such complex product involves derivatives or is a debenture with special features, the bank may also need to apply pre-investment cooling-off period arrangement for the investor. Further, for derivative products or leveraged transactions, the bank would need to assure itself that the investor understands the nature and risks of the products and has sufficient net worth to be able to assume the risks and bear the potential losses of trading in such products.

Banks are required to make adequate disclosure of relevant material information to help customers make informed investment decisions.

The objective of risk disclosure is to enable a customer to understand the investment product before entering into a transaction. Banks may adopt a risk-based approach, having regard to the circ*mstances, such as the customer’s trading pattern, level of sophistication and investment experience, as well as the product’s complexity and risk, in providing risk disclosure to customers.

For example, a bank can streamline risk disclosure to a customer when conducting subsequent transactions of an investment product comparable to the investment product for which risk disclosure has already been conducted previously by the bank and the bank assures itself that the customer understands the product.

Banks and their staff are not required to be registered prior to selling currency-linked / interest rate-linked investment products issued by banks (“CLILs”) as such products are not regulated under the Securities and Futures Ordinance (“SFO”), yet the HKMA generally expects banks to follow similar standards as those applicable to SFO-regulated investment products when selling CLILs. In particular, if the sale of CLILs involves solicitation or recommendation, or the concerned CLIL is having a complex structure, banks should ensure suitability of the transaction, give proper disclosure of product features and risks, and ensure that marketing materials are clear, fair, and present a balanced picture.

In addition, a number of enhanced investor protection measures implemented by the HKMA are applicable to banks selling CLILs to retail banking customers. For example, banks are required to provide retail banking customers with “Important Facts Statement” which contains concise summary of the key features and risks of the CLIL in plain language; the risk profiling and face-to-face selling process for investment products with derivatives (such as CLILs with non-standardised structure) should be audio recorded; less sophisticated retail banking customers buying unlisted structured products (e.g. CLILs) should be entitled to a pre-investment cooling-off period of 2 calendar days.

You may contact the Investor Compensation Company Limited, a wholly-owned subsidiary of the Securities and Futures Commission established for the administration of claims by customers of intermediaries, including registered institutions and brokers, against the Investor Compensation Fund. The contact details are:

Tel: (852) 2523 7382
Fax: (852) 2523 7389
E-mail: icc@hkicc.org.hk
Address: 54/F, One Island East, 18 Westlands Road, Quarry Bay, Hong Kong

Only those individuals whose names are entered in the Register of Securities Staff of AIs (HKMA Register) on the HKMA's website may engage in the conduct of regulated activity(ies) of a registered institution. It is the responsibility of a registered institution to ensure that an individual is fit and proper before submitting the specified particulars to the HKMA Register for the individual to conduct regulated activity(ies) as a relevant individual. It is also the responsibility of a registered institution to remove the particulars from the HKMA Register when a relevant individual is not fit and proper or no longer conducts any regulated activity for the registered institution.

Any person who is directly responsible for supervising the conduct of any regulated activity of a registered institution is expected to be appointed as an executive officer. Executive officers must obtain written consent of the Monetary Authority. Application to become an executive officer should be made to the HKMA through the registered institution concerned.

Relevant individuals and executive officers of registered institutions are subject to the same competence requirements set out by the Securities and Futures Commission (SFC) for licensed representatives and responsible officers of licensed corporations respectively. The competence requirements are detailed in the Guidelines on Competence issued by the SFC. In addition, a relevant individual or an executive officer must have met the fitness and properness standards laid down in the Fit and Proper Guidelines issued by the SFC.

To access the Guidelines on Competence and the Fit and Proper Guidelines, please visit the SFC's website.

In general, if you were registered as a relevant individual of a registered institution before and seek to re-register within 3 years from the date of your last registration, you do not have to take any licensing examination if you seek to engage in the same regulated activity (or other regulated activity with the same competence requirements) and in the same role (as a relevant individual or as an executive officer) as you were last registered.

If you have left the industry for between 3 and 8 years and now seek to be engaged by a registered institution as a relevant individual for the same regulated activity (or another regulated activity having the same competence requirements) and in the same role as before, you may be exempted from licensing examinations (including the recognised industry qualifications and the local regulatory framework paper requirements) provided that you have completed five Continuous Professional Training (CPT) hours per regulated activity for each year of absence from the industry (where local regulatory training must make up at least 50% of the CPT activities).

For details about exemptions from licensing examinations for a relevant individual and the criteria for exemption (which are the same as a licensed representative), you may refer to the Guidelines on Competence posted on the Securities and Futures Commission’s website (including paragraph 4.4.4 for re-entrant exemption).

The HKMA does not approve or grant exemption from CPT requirements for relevant individuals, nor does the HKMA endorse any CPT course or course provider. It is the responsibility of a registered institution to ensure that an individual is fit and proper (including meeting the CPT requirements) before submitting the specified particulars to the HKMA Register for the individual to conduct regulated activity(ies) as a relevant individual. It is also the responsibility of a registered institution to remove the particulars from the HKMA Register when a relevant individual is not fit and proper (including meeting the CPT requirements).

For details about CPT requirements, please refer to the Guidelines on Continuous Professional Training posted on the Securities and Futures Commission’s website.

The data retention period of different types of consumer credit data that may be retained by a CRA is specified under the Code of Practice on Consumer Credit Data (the Code) issued by the Office of the Privacy Commissioner for Personal Data (PCPD). For account repayment data, the general rule on data retention is that such data may be retained by a CRA in its database for five years from the date of creation of such data or until the expiry of five years after account termination. However, there are certain exceptions. For example, if you have defaulted in repayment for a period in excess of 60 days, then such account default data may be retained until the expiry of five years after the amount in default is fully settled.

For bankruptcy record, a CRA may collect this type of information from public sources for credit reporting purposes. The Code provides that public record data relating to a declaration or discharge of bankruptcy may be retained by a CRA in its database for a period of eight years from the relevant declaration of bankruptcy.

For more information on data retention of other types of consumer credit data by a CRA, please refer to the Code. For any questions relating to the Code, please contact the PCPD direct. The contact information of the PCPD can be found on its website.

You may make a data correction request with the CRA concerned. The CRA should handle your data correction request in accordance with the Code of Practice on Consumer Credit Data (the Code) issued by the Office of the Privacy Commissioner for Personal Data (PCPD) (clauses 3.19 and 3.20 of the Code refer).

For more information, please refer to the Code. If you have any questions about the Code, you may wish to make an enquiry with the PCPD direct. The contact information of the PCPD can be found on its website.

In general, it is the commercial decision of banks on whether and how much they will lend to borrowers. In making the decision, banks will consider a host of factors, such as repayment ability of the borrowers and any risk mitigating arrangements.

However, in the case where the lending activities engaged by banks could pose major prudential concern or significantly impact banking stability in Hong Kong, the HKMA will issue guidelines requiring banks to adopt prudent standards and practices to strengthen their risk management.

With regard to property mortgage loans, the HKMA has introduced several rounds of countercyclical macroprudential measures since October 2009 to enhance the resilience of banks to cope with any possible downturn in the local property market and prevent homebuyers from overstretching themselves. In introducing each round of measures, the HKMA has strived to minimise the impact on genuine end-users, particularly first-time homebuyers.

There are two common approaches adopted by banks in assessing the repayment ability of mortgage applicants:

Debt servicing ratio (DSR)-based lending – DSR is the ratio of the monthly debt obligations of mortgage applicants to their monthly income. It is usually applicable to applicants with regular income. Under this approach, banks will request applicants to provide their proof of income and evidence of indebtedness.

Net worth-based lending – this is usually applicable to applicants who could not provide regular income proof, and have to rely on their net worth to demonstrate their repayment ability. Under this approach, banks will request applicants to provide evidence of their net assets and indebtedness.

The purpose of “positive mortgage data sharing” is to enhance credit assessment of banks to facilitate prudent lending and more effective credit risk management by credit providers, thereby preventing over-borrowing by consumers and over-lending by credit providers. This is conducive to the general stability of the banking system in Hong Kong, which is crucial to the interest of depositors as well as the financial stability of Hong Kong as a whole.

The HKMA expects banks to make full use of the PMDS scheme and to verify the mortgage count declared by mortgage loan applicants with the mortgage count information obtained from the Credit Reference Agency database.