Statement Issued by Professor Chan Chi-fai, Advisor Appointed to Advise Management of Octopus Cards Limited

Professor Chan Chi-fai, the Advisor appointed by the Monetary Authority (MA) under Section 52(1)(B) of the Banking Ordinance to advise the management of Octopus Cards Limited (OCL), today (27 July) commented on the announcement by OCL regarding the independent review of failed Octopus EPS Add-Value Transactions. He agreed with the findings and recommendations of the review and believes that the recommendations arising from the Report should be implemented in stages starting immediately.

Chinese University of Hong Kong Business Administration Faculty Professor Chan, who is also the Chairman of the Hong Kong Deposit Protection Board, was appointed as Advisor to OCL by the MA in February. During the five-month review, in which he was involved, he gave advice both on the Independent Auditor's report and to the management of OCL.

"The priority for OCL is to make refunds to all Octopus cardholders affected by incomplete EPS add-value transactions," said Professor Chan. "To safeguard consumers' interests, the EPS add-value service for Octopus cards should remain suspended until all the necessary remedial measures have been implemented," he added.

Professor Chan agreed with the recommendations of the Report that OCL should step up its efforts in consumer protection. He said, "OCL needs to strengthen communication with its customers and provide them with greater convenience by allocating more resources, opening up new channels for service delivery and expanding its service. For example, the company should initiate arrangements to identify and contact cardholders so that they can communicate with them in case problems arise." In this connection, he supported OCL's new measures in promoting the use of personalised Octopus cards and the launch of a "customer engagement" programme.

He added: "Despite the problems with the EPS add-value transactions, the Auditor's Report did not identify evidence of any systemic problems in the rest of OCL's operations. The overall standard of service provided by the company is satisfactory and the Octopus card remains an effective and convenient retail payment system, which is widely used. As an independent Advisor for OCL, I will seek to ensure the company adopts appropriate measures to implement the report's recommendations."

Professor Chan's appointment as advisor will remain in force until all recommendations in the report are implemented.

27 July 2007