SFC adopts measures to enhance investor protection

28 May 2010

The Securities and Futures Commission (SFC) today announces a package of measures to strengthen the regulatory regime governing the sale of investment products.

The latest regulatory initiatives, which result from a three-month public consultation, are directed at enhancing investor protection and addressing issues highlighted in the report submitted by the SFC to the Financial Secretary in December 2008 (Note 1).

The measures - outlined in a set of consultation conclusions - include a consolidated product handbook with revised product codes for unit trusts and mutual funds and for investment-linked assurance schemes as well as a new product code for unlisted structured investment products. There are also requirements for product key facts statements to summarise the key features and risks of investment products, issuers to provide a post-sale “cooling-off” or “unwind” right for certain unlisted structured investment products to give investors a window to exit these investments, and conduct requirements for intermediaries to enhance selling practices relating to the sale of investment products.

The majority of the proposals in the consultation paper published in September 2009 will be adopted, with some modifications and amendments to take into account responses received during the consultation process. Details of the submissions and the SFC’s responses to the comments are contained in the conclusions.

“We have carefully analysed the comments received and adopted a balanced approach in arriving at the conclusions. We believe these investor protection enhancing measures are reasonable and in line with our regulatory objectives,” said the SFC’s Chief Executive Officer, Mr Martin Wheatley.

“The measures will strengthen investor protection and ensure that Hong Kong remains a well-regulated, vibrant financial market. We thank our stakeholders for their constructive feedback, which has enabled us to achieve a healthy balance between the need for market innovation and investor protection,” Mr Wheatley added.

Over 100 submissions were received during the consultation period.

In finalising the proposals, the SFC held discussions with a diverse group of industry participants, including banks, brokers, fund managers, investment advisers, and professional firms as well as consumer groups and academics. A forum was organised for some 240 industry participants to exchange views on two key proposals and to share the insights of experts from major overseas regulators into some of the implementation issues.

Some of the measures will take effect immediately after publication of the revised codes in the Government Gazette, while transitional arrangements will be implemented in respect of some requirements to enable the industry to make the necessary adjustments.

In introducing the enhanced regulatory regime, the SFC will work closely with the industry and may issue additional guidance where necessary. It will also launch a series of focused investor education programmes to inform investors of the details of the new measures.



On 25 September 2009, the SFC issued a “Consultation Paper on Proposals to Enhance Protection for the Investing Public” for a three-month consultation which ended on 31 December 2009. Please click here to view the report entitled “Issues Raised by the Lehmans Minibonds Crisis, Report to the Financial Secretary, December 2008”.

Page last updated : 1 Aug 2012