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| No.2 February, 2010 |
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Investor Education Council and Financial Dispute Resolution Centre proposed |
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 The Hong Kong Government has kicked off a three month public consultation process to help guide better education for investors and a proposed new centre for managing financial disputes.
The Secretary for Financial Services and the Treasury, Professor K C Chan, said views were being sought from the community until May 8 as well as from relevant professions following the release of a consultation document - "The Proposed Establishment of an Investor Education Council and a Financial Dispute Resolution Centre".
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Professor Chan said protecting and educating consumers had become more important with the development of more complex investment products that cut across the traditional boundaries of the banking, insurance and securities sectors.
He said the proposed establishment of an Investor Education Council (IEC) and the setting up of a Financial Dispute Resolution Centre (FDRC) would better educate consumers and help resolve monetary disputes between individuals and financial institutions.
"We attach great importance to investor education. It not only helps protect investors themselves, but also enhances investor confidence in the financial system and the effectiveness of their dealings with financial service providers," he said.
The plan would see the IEC set up as a company wholly owned by the Securities and Futures Commission (SFC). The SFC will fully fund the operation of the IEC with no extra levies and charges to be imposed on investors.
"At present, outside of the courts, there is no independent mechanism in place to settle a dispute between a consumer and a financial service provider," Professor Chan said.
"We therefore propose the introduction of a 'Financial Dispute Resolution Scheme' (FDRC) to provide a one-stop, independent and affordable avenue for consumers to resolve monetary disputes with the financial service providers.
"This offers an alternative to litigation, which may be disproportionately costly and protracted for consumers."
The scheme would include financial institutions that are licensees or regulates of the Securities and Futures Commission and the Hong Kong Monetary Authority. Claimants would be able to enter into a voluntary process overseen by an independent mediator.
If mediation is unsuccessful, the centre would then help the claimant before an arbitrator whose decision would be binding. Overseas experience has shown that up to 80 per cent of cases are successfully mediated.
Professor Chan said the FDRC would be a company limited by guarantee with a Board of Directors appointed by the Government to ensure the independence and impartiality of its dispute resolution procedures.
"We propose that the maximum claimable amount under the scheme be set at HK$500,000 – this would cover more than 80% of the monetary disputes currently handled by the HKMA," he said.
Professor Chan said mediation fees would remain affordable for individuals although financial institutions would pay a higher level of the case fees so as to encourage them to do their utmost in handling complaints.
The consultation document can be viewed at the Financial Services and the Treasury Bureau's website (www.fstb.gov.hk/fsb/ppr/consult/consult_iec_fdrc.htm). |
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