Regulators must try harder to find a happy medium between maintaining a vibrant industry and adequate protection for consumers
An end-of-year report card on Hong Kong's retail financial services sector would be mixed, with some reprehensible behaviour, feathers in a few caps and an over-riding sense that the industry must try harder.
Let's start with good news. The sector has continued to broaden the range of products and financial tools available to retail investors and educate distributors and investors alike.
But before any smugness sets in, let's review the catalogue of bad behaviour. It begins with the collapse of two hedge funds heavily sold by the once reputable, now disgraced, advisory firm Towry Law International (TLI). TLI's parent company agreed to pay compensation without admitting liability.
TLI was also one of many financial advisory firms involved in selling geared with-profits funds, which left investors trapped in underperforming investments by hefty and unforeseen withdrawal penalties. Two life insurance companies involved have left the lucrative Hong Kong market. But for many investors the saga continues.
Susan Field did what many investors would like to do when she sued her financial adviser, Barber Asia in July. She won $3.2 million in damages after the Court of First Instance ruled the adviser failed in its duty of care to warn her of the risks involved with gearing - a strategy that involves using borrowed money to boost leverage, and which also enables the adviser to charge lucrative commission fees.