Civic Party calls on the government to follow Singapore’s lead in taking stronger measures to help the Lehman victims
In response to yesterday’s announcement by K C Chan the Secretary for Financial Services and the Treasury that the Hong Kong Association of Banks will form a task force to follow up on the minibond issues and to consider providing assistance, the Civic Party expresses the following concerns:
1. The setting up of such taskforce will not resolve the current problem. The complaints have been dragging on for more than two weeks and the victims are getting more and more anxious.
2. There is no time table set for this taskforce and the remit is merely to “assist”
By way of contrast, the Monetary Authority of Singapore (MAS) has taken much more proactive and helpful measures. The financial institutions in Singapore (in consultation with MAS) has appointed independent parties to oversee their complaints handling processes and investigations into any misselling of Lehman products. The independent party is intended to assure investors that their complaints will be heard, documented and reviewed fairly and swiftly. In addition MAS will work with Financial Industry Disputes Resolution Centre should investors choose to seek mediation and adjudication. Civic Party calls on the government to consider similar measures.
Two points emerge from the reports so far:
1. The regulatory authorities have permitted highly complicated and risky financial products to be sold on the retail market via banks trusted by their long term customers.
2. There is prima facie evidence of breaches of the code of conduct set by the regulatory authorities in that the risks of such products have not been matched with the risk bearing capacities of the customers and the risks have not been fully and clearly explained to the customers.
To restore confidence in our banking and financial services and to allay the growing agitation of affected customers whose life savings have been tied up in these products, the Civic Party calls on the government and regulatory authorities to take the following measures:
1. The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) should explain why such highly complicated and risky products were allowed for retail sale and undertake a review of the current system
2. The HKMA should direct the distributor banks to appoint independent parties with the following terms of reference:
(a) investigate the bank’s exposure to Lehman and whether the bank was selling the Lehman products as principal or agent
(b) immediately investigate complaints of mis-selling
(c) provide all relevant documents to the complainant customer and provide an opportunity to be heard
(d) immediately inform the complainant of the findings or outcome of the investigation
3. Initiate disciplinary proceedings if the complaint is substantiated, taking into account any mitigating circumstances such as settlement with or compensation paid to the complainant (see the case of Towry Law (Asia) Limited)
4. Consider increased resources to the Consumer Legal Assistance Fund so that it may assist consumers in seeking redress in case of mis- selling (see the case of Field v Barbar Asis Limited as described in article of Audrey Eu enclosed)
5. HKMA should ask the banks to provide monthly updates
6. HKMA should make report to the Legislative Council of the reports or findings of the independent parties before the middle of next year
7. HKMA should require the Hong Kong Bank to provide regular updates of the value of the collaterals held