The Monetary Authority suspends Sit Wai Hong for three years

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19 Jun 2013

The Monetary Authority suspends Sit Wai Hong for three years

The Monetary Authority (MA) has suspended the relevant particulars of Mr Sit Wai Hong (SIT) from the register maintained under section 20(1)(ea) of the Banking Ordinance for three years from 19 June 2013 to 18 June 2016 (Note 1).

The disciplinary action follows the MA’s investigation which found that SIT had, in the course of selling an investment-linked assurance scheme (ILAS) to a customer in October 2010, failed to:

  • take reasonable steps to ensure that the customer had sufficient financial resources to buy the ILAS.  The total premium payable on the ILAS was grossly disproportionate to the customer’s net worth and monthly income.  It would have exhausted the customer’s lifelong savings after just payment of the first annual premium;
  • ensure the suitability of the ILAS for the customer with regard to her personal background and the fact that she had no prior investment experience; and
  • act with due skill, care and diligence, in the best interests of the customer.

The MA is of the opinion that SIT is not a fit and proper person to be a relevant individual.  In determining the disciplinary sanction, the MA has taken into account that:

  • if SIT’s employer had not settled the case with the customer, the customer would have had to surrender her ILAS policy and suffer a substantial early encashment charge (Note 2);
  • relevant individuals are expected to observe a high standard of integrity and competency because they have access to persons from different walks of life who use the services of banks and place a high degree of trust in banks and their staff.  SIT’s conduct was a breach of the trust of the customer; and
  • SIT has no previous disciplinary record.

The action follows SIT's withdrawal of an application with the Securities and Futures Appeals Tribunal to review the MA's decision to discipline him.

"ILAS is a complex product with features which to some people are not easy to understand,” said a spokesman of the Hong Kong Monetary Authority.  “To minimize the risk of mis-selling, banks and their staff are expected to take all necessary measures to ensure that the ILAS is indeed suitable when sold to the customer and that the customer understands clearly the key features of the ILAS before purchasing it.”  "Disciplinary actions may be taken against a relevant individual if his or her conduct in the sale of ILAS products raises concerns about his or her fitness and properness to be a relevant individual.” he added.


Notes:

1. At the relevant time, SIT was an individual whose name was entered in the register maintained under section 20(1)(ea) of the Banking Ordinance as a person engaged by The Hongkong and Shanghai Banking Corporation Limited in respect of Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities.  SIT is currently employed by another bank.

2. An early encashment charge is usually applied on the early surrender and withdrawal from an ILAS.  In SIT’s case, the early encashment charge was applied on a reducing scale throughout the terms of the ILAS, e.g. 50% (first year), 30% (second year) and 21% (third year).


Hong Kong Monetary Authority
19 June 2013

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Last revision date : 19 June 2013