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Hong Kong's banking watchdog has called for a sweeping review of consumer-protection laws relating to bank customers.

One outcome of such a review, the Hong Kong Monetary Authority said, might be the creation of a banking ombudsman for Hong Kong.

HKMA chief executive Joseph Yam Chi-kwong and his deputy David Carse made the call during yesterday's annual HKMA report to the Legco Panel on Financial Affairs.

Mr Yam told the panel the HKMA had contributed to the proposed debate on consumer protection by preparing a comparative study for legislators of the systems in Hong Kong, Australia and Britain.

'The HKMA only has a general duty to 'provide a measure of protection to depositors' under the Banking Ordinance,' Mr Yam said.

'There is no explicit mandate with respect to customer protection.'

The HKMA study and the call for a debate on the subject follows a controversial decision by local banks to begin imposing charges for certain services.

It provoked an outcry from consumer groups and some legislators worried banks were acting arbitrarily and abrogating what some critics said was a community responsibility to provide banking services.

Responding to the study, legislator Emily Lau Wai-hing said it represented a 'good start' to the debate.

'Legco must now prepare its own report,' she said.

Mr Carse told the panel the comparative study had revealed 'gaps' in Hong Kong's consumer-protection regime.

'Arguably those gaps should be filled and then it's a question of who should fill them, and how they should be filled,' he said.

The HKMA retained an open mind on the subject and first wanted to collect opinions from lawmakers, the public and the press.

Quizzed by lawmakers on the number and nature of complaints about banks, Mr Carse said there had been about 600 complaints lodged last year - half of which related to debt-collection practices by banks.

The study on existing consumer protection regimes had focused on Britain and Australia, said the HKMA in a paper presented to the Panel, because these two jurisdictions were both advanced in their treatment of consumer banking issues and had legal systems similar to Hong Kong's.

The study highlighted the fact the HKMA had no statutory responsibility for consumer protection - unlike both Britain and Australia where the regulator did have such a responsibility.

It also had no ability to apply sanctions in the event of non-compliance with its Code of Banking Practice - as with the Australian regulator, but unlike the enforcement regime in Britain, which included such sanctions.

It also had no ombudsman scheme to resolve customer complaints - available in both Britain and Australia.

Emphasising that the study sought only to highlight gaps, and not to make policy recommendations, the HKMA said it would proceed to consider policy implications, including: Whether any change to the existing system was needed? If so, what should be done? How it should it be achieved, and who should do it?

The HKMA remained open-minded on whether it should have a more explicit role in running a consumer-protection system, Mr Yam said.

It would consult further and more widely on the policy implications.

'We welcome advice from Members before we proceed further,' he said.



Watchdog calls for better consumer protection