A government proposal to set up a financial dispute resolution centre to handle investor claims of up to HK$500,000 against banks, brokers and asset management companies is drawing criticism for not going far enough to protect investors.
The proposal, which comes in the wake of the fiasco over Lehman Brothers minibonds, is intended to give investors an alternative to filing a lawsuit. But critics say the HK$500,000 ceiling is too low and will not cover insurance companies.
The secretary for financial services and the treasury, Professor Chan Ka-keung, announced details of the government's proposal yesterday, and said it was intended to bridge a gap.
'At present, there is no independent mechanism outside the court to settle a dispute between a consumer and a financial institution,' he said. 'The proposal provides an alternative to investors besides putting the case to litigation, which would be costly and lengthy.'
Chan said the HK$500,000 cap on claims was sufficient to cover 80 per cent of the roughly 2,000 investor complaints the Hong Kong Monetary Authority received in a typical year.
The government said the proposal excluded the insurance sector because it already had a system to handle claims up to HK$800,000. However, customers who bought the same investment-linked insurance products from banks and insurance agents would face different treatment because the caps for claims would be different.
