Hong Kong touts investor protection initiatives

The government says it will introduce further measures to protect investors when appropriate.

When formulating and implementing future financial policies, the government said it will foster its two main policy objectives of investor protection and financial stability.

The government said it has implemented recommendations made by the Monetary Authority and the Securities & Futures Commission over the past three years in phases. These recommendations cover a enhancing the selling practices of investment products, the business conduct of intermediaries and investor education, among others.

The authority has issued circulars to registered institutions, requiring them to attach "health warnings" to retail structured products and to have clear segregation between general banking business and securities-related activities.

The commission has implemented a series of measures, including the requirement to provide product key fact statements, introducing cooling-off periods, and disclosing commercial interest involved in the sales process.

The authority and the commission have facilitated large-scale settlement between banks and investors of minibonds and structured financial products related to Lehman Brothers. As a result, the majority of investors have been able to recover a significant portion of the money they invested without the need to go through lengthy and costly legal processes governing civil litigation of that nature.

The government’s aim is to foster investor protection and financial stability in the future. The government notes that numerous recommendations have been implemented to enhance regulation since the Lehman Brothers incident that helped trigger the Great Recession of 2008.

Following the incident, the Monetary Authority and the Securities & Futures Commission submitted reviews making numerous recommendations.