Banking Conduct and Enforcement

Apart from prudential supervision, the HKMA attaches great importance to supervision of banks’ business practices and conduct to protect the interests of bank customers. The key framework for the HKMA’s work on enhancing consumer protection is outlined below.

The HKMA attaches great importance to financial inclusion and has been spending significant effort in promoting access to basic banking services by different segments of society to meet the basic needs of people’s daily lives or the needs of fund transfers for legitimate businesses. In particular, the HKMA has been working closely with the banking industry on the following key focus areas:

While considerable efforts have been made globally by banking supervisors and senior management of banks in enhancing governance and risk management framework in recent years, it is increasingly recognised that much more needs to be done to promote a sound culture at all levels of banks.

Regulators around the world have placed increasing emphasis on the role of the board, in particular the role of Independent Non-Executive Directors (INEDs), what is expected of them, and the knowledge, expertise and personal qualities they must possess in order to effectively discharge their duties.

The HKMA requires banks to put in place appropriate and effective mechanisms and procedures to handle customer complaints fairly, consistently and promptly. The key elements of effective complaint handling by banks are set out in a guidance note on Complaint Handling Procedures. Failure to have in place effective arrangements to handle customer complaints may call into question whether a bank continues to satisfy the authorization criteria in the Seventh Schedule of the Banking Ordinance.

The HKMA conducts investigations or otherwise follows up on issues arising from on-site examinations and offsite reviews, banking complaints, whistle-blowing and banks’ self-reporting and which raise possible concerns such as breaches of the laws and regulations, misconduct, and/or fitness and properness of banks and/or their staff.