Hong Kong Monetary Authority
The Hong Kong Monetary Authority (HKMA) was established in April 1993 by merging the Office of the Exchange Fund with the Office of the Commissioner of Banking. The HKMA is responsible for maintaining monetary and banking stability, including maintaining currency stability within the framework of the Linked Exchange Rate system under which the Hong Kong dollar is pegged to the US dollar.
New Resolution centre on target for take-off
Hong Kong's planned financial dispute resolution centre, which will allow clients to use mediation to seek claims of up to HK$500,000 against their banks or brokers, is on target to open by the end of June, according to the government.
The Undersecretary for Financial Services and the Treasury, Julia Leung Fung-yee, said the government had already found a chief executive to head the new organisation but declined to say who it was.
The centre, which will need HK$15 million to set up and cost HK$55 million a year to run, will be funded by the government, the Securities and Futures Commission and the Hong Kong Monetary Authority for its first three years and thereafter by financial institutions.
The government is looking for a 10,000 square foot office on Hong Kong Island to house the centre, which will have a have a staff of 20, including some in-house mediators to handle investor claims under HK$100,000.
The centre will also maintain a list of independent mediators who will charge on a case-by-case basis to handle claims from HK$100,000 to a maximum of HK$500,000.
Leung said that among the more than 1,000 mediators in the city, more than 200 had expressed interest in working for the centre. The Hong Kong Securities Institute will start screening and training applicants next month. Only those who pass the initial assessment and have experience handling commercial disputes will be allowed to work for the centre.
Mediators will be chosen by the customer and the financial firm involved in the dispute. Of the HK$12,000 cost, the customer will pay HK$2,000 and the financial institution HK$10,000 for the four-hour mediation.
'This will be a cheaper and quicker way for investors to solve their disputes with their banks or brokers than putting the cases to the court,' Leung said. 'Some court cases last years and cost multimillions of dollars.'
The decision to set up the resolution centre followed the Lehman Brothers mini-bonds 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.
Leung said the centre formed part of the government's efforts to promote mediation.
Some legislators have criticised the method, saying a mediator can only help parties in a dispute reach a voluntarily settlement but will have no power to issue rulings or order compensation.
But Leung said qualified mediators knew how to bring the two sides together to negotiate and to narrow their differences until they found a solution.
'According to overseas experience, 80 per cent of mediations successfully settle disputes between financial institutions and investors,' she said. 'We want to encourage more mediation here.'
Leung said even after a case was settled by the mediation process, the SFC or the HKMA could still investigate if licensed institutions or their staff had been involved in any malpractice.
If the mediation process fails, investors can apply for an arbitration ruling on whether or not the financial institution has to pay compensation. Such arbitration results can only be appealed in court on legal grounds.