On 8 November 2011, the Securities and Future Commission (SFC) issued a consultation paper on proposals to amend the Code of Conduct for Persons Licensed by or Registered with the SFC.
The SFC has proposed the changes in order to:
The SFC has posed various questions in relation to the proposals and invited comments by 9 January 2012.
What will the FDRC mean for financial institutions?
The FDRS is the government's response to the call from the investing public for an independent dispute resolution scheme to enable customers to resolve financial disputes with FIs without having to resort to formal legal proceedings. FIs can therefore expect to need additional resources to handle customer complaints in the first place and then to manage the resolution process.
In terms of internal complaints handling, the proposed amendments to the Code specifically oblige FIs to:
Where the internal complaints procedure fails, FIs would be obliged to participate in and would be bound by the FDRS process. They would also be obliged to make full and frank disclosure before mediators and arbitrators and render all reasonable assistance to the FDRS.
In addition, the FI would need to notify the SFC immediately upon:
The “miscellaneous” amendments
The SFC has also taken this opportunity to propose the following amendments:
The SFC has also proposed that the obligation in paragraph 12.5 of the code for FIs to report actual or suspected material breaches by the FI or an employee, be expanded to cover such breaches by clients. In rationalising the need for this extension, the SFC has referred to the existing requirement to report transactions which appear suspicious under one of the three relevant ordinances to the Joint Financial Intelligence Unit. This controversial proposal has potentially far reaching consequences and is likely to generate heated debate.
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