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Hong Kong Monetary Authority (HKMA)

Taking orders on mobiles to be banned

PUBLISHED : Tuesday, 22 May, 2012, 12:00am
UPDATED : Tuesday, 22 May, 2012, 12:00am

Brokers and bank staff will be banned from using their mobile phones to take client orders from December 1 as part of a new code of conduct imposed by the securities watchdog to enhance investor protection.

They will instead have to use landline phones so their calls can be recorded.

The Securities and Futures Commission will also require financial firms to extend their retention period for phone recordings for client orders from three to six months. And they will be required to have written authorisations for third parties to place orders on client accounts.

Meanwhile, the SFC and the Hong Kong Monetary Authority yesterday told banks and brokers to prepare for the launch of the financial dispute resolution centre (FDRC) in June. All banks regulated by the HKMA and brokers, fund managers and financial advisers licensed by the SFC will have to be members of the FDRC from June 19.

From that date they will have to inform their clients about their right to refer disputes to the centre, which uses mediation to handle clients' complaints and can award claims of up to HK$500,000 against banks or brokers.

'The SFC is in full support of the ... the FDRC. We believe [it] will further strengthen investor confidence in the financial industry,' said SFC chief Ashley Alder.

The FDRC has staff to handle small claims and will outsource large claims to trained mediators chosen by the customer and the financial firm involved.

Of the HK$12,000 cost, the customer will pay HK$2,000 and the financial institution HK$10,000 for a four-hour mediation, which is seen as a more efficient way for investors to resolve disputes with banks or brokers than going to court.

The decision to set up the resolution centre followed the Lehman Brothers minibonds controversy, which erupted when more than 20,000 investors in late 2008 complained they had been misled by banks and brokers into buying products linked to Lehman. Their investments became worthless overnight after the US investment bank collapsed in September 2008.