Consumer complaints about banks are on the rise. But there are limits to how the HKMA can respond.
There has recently been a surge in the number of complaints lodged with us against banks in Hong Kong. In the first quarter of this year, we received 479 complaints compared with 176 in the same period last year. Frankly, we are finding it a little difficult to cope with, notwithstanding the great deal of sympathy that we have for the plight of some of the complainants, simply because we do not have the legal powers to get involved in resolving the complaints. This we have pointed out again and again, particularly during discussions on the subject of protection for consumers of banking services, and not least in our contacts with the Legislative Council Panel on Financial Affairs. Indeed, we have urged all concerned to address how this particular matter should be dealt with, as a matter of policy and in terms of how the unavoidable banking consumer complaints should be fairly adjudicated. We have further provided considerable background research materials, particularly on practices in other jurisdictions, and have presented alternatives, with analyses of the pros and cons of each, to assist in the deliberation of the matter.
The Banking Ordinance gives us powers to regulate banking business and to supervise authorized institutions "so as to provide a measure of protection to depositors (and) to promote the general stability and effective working of the banking system". The problem we face is that the great majority of the complaints do not involve matters that risk undermining the interests of depositors or threatening the general stability and effective working of the banking system. We are prepared to make use of the more specific provisions in section 7(2) of the Banking Ordinance, which imposes a function on us to:
- Take all reasonable steps to ensure that ... all authorized institutions ... are operated in a responsible, honest and business-like manner.
- Promote and encourage proper standards of conduct and sound and prudent business practices amongst authorized institutions.
- Suppress or aid in suppressing illegal, dishonourable or improper practices in relation to the business practices of authorized institutions.
But there is a limit to how far we can stretch the interpretation of these functions, even with all the good intentions in the world to have the complaints fairly and expeditiously resolved to the satisfaction of those concerned. We also do not have the powers appropriate for a consumer watchdog. We do not, for example, have the power to order compensation to be paid, despite the fact that many complainants expect us to do so. In most cases, we have no alternative but to refer the complaints back to the banks concerned, with the advice that they be dealt with "in a responsible, honest and business-like manner" in accordance with "proper standards of conduct and sound and prudent business practices", etc. We also monitor how the complaints are dealt with. In February this year, we even went as far as to issue an eleven-page guidance note on Complaint Handling Procedures for the banks to follow. (See HKMA Supervisory Policy Manual at http://www.info.gov.hk/hkma/eng/bank/spma/attach/IC-4.pdf)
We have recently issued another circular to authorized institutions asking them, among other things, to step up their monitoring of the performance of their debt collection agencies, which are giving rise to more than half of the complaints we receive. We have asked them to keep complaint statistics in respect of the agencies they use, provide such statistics to us on a quarterly basis, and explain to us how they plan to deal with the agencies which attract more complaints than others. I hope this will put both authorized institutions and debt collection agencies on the alert. We shall certainly not tolerate the use of irresponsible debt collection tactics. We expect institutions to discipline debt collectors using such tactics, in the interests of the consumers, the banking sector, and the society as a whole. We shall also be talking, in appropriate terms, to the institutions that are the more common subjects of complaints, to see if anything can be done on their part to help alleviate the problem.
Hopefully, the above mentioned measures will slow down the increase in the number of complaints, which is rather taxing on our resources, particularly in the light of our commitment to try and reduce headcount in the HKMA during this year by 5 per cent. However, if we do not see improvements in the near future, I think there is a need for better arrangements. This is only fair to the complainants, and to us. I am glad that next week the Legislative Council Panel on Financial Affairs will be addressing the matter with the involvement of the Policy Bureau and the Hong Kong Association of Banks, and ourselves. We stand ready, working within our legal powers and responsibilities, always to assist.
Joseph Yam
6 June 2002
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