Three-year suspension for agent who mis-sold ILAS products
Hong Kong has dished out its first punishment for mis-selling the controversial products known as investment-linked assurance schemes (ILAS).
The Hong Kong Monetary Authority suspended Sit Wai-hong - a former front-line employee of HSBC who now works at China Citic Bank International - for three years from the register under the Banking Ordinance, meaning Sit is not allowed to sell investment products until June 18, 2016.
ILAS are complicated products with complex fees and charges.
They are created by insurers and sold by banks and financial advisers. The HKMA received 30 complaints about the selling of ILAS last year, double the number from the year before.
Following media reports of a complaint from a customer, the HKMA investigated and found that when selling the product to a customer in 2010, Sit had failed to take reasonable steps to ensure the woman had enough financial resources to buy the ILAS.
The premium payable was grossly disproportionate to the customer's net worth and monthly income, the HKMA said. Sit failed to act in the woman's best interests and to ensure the product's suitability for her, it said.
"Due to customer confidentiality and data privacy, it is inappropriate for us to discuss the details of the case," an HSBC spokesman said last night, declining to comment when asked if the bank would review all the cases Sit had handled.
Citic Bank International said Sit has not been responsible for the sale of any investment products at the firm.
The Post reported on Monday that in the light of complaints about mis-selling, the HKMA, the Securities and Futures Commission, the Insurance Authority and the Federation of Insurers are rolling out changes this summer to the way ILAS may be sold.
"ILAS is a complex product with features which to some people are not easy to understand," an HKMA spokesman said.
"To minimise the risk of mis-selling, banks and their staff are expected to take all necessary measures to ensure that the ILAS is indeed suitable when sold to the customer and that the customer understands clearly the key features of the ILAS before purchasing it."