Securities & Futures Commission of Hong Kong

The Suitability Requirement

The Suitability Requirement is set out in Paragraph 5.2 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (SFC). It requires a licensed or registered person to, when making a recommendation or solicitation, ensure the suitability of the recommendation or solicitation for the client is reasonable in all the circumstances, having regard to information about the client of which the licensed or registered person is or should be aware through the exercise of due diligence.

The Suitability Requirement is the cornerstone of investor protection and is integral to selling practices, which encompass the distribution and provision of advice on investment products by licensed and registered persons. Given its importance, the SFC has provided guidance to the industry on our expected standards in relation to the Suitability Requirement as well as on other aspects of selling practices more generally, including product due diligence and disclosure of monetary benefits.

For easy reference, guidance related to the Suitability Requirement and on other aspects of selling practices is available through this webpage. The relevant circulars are posted here and the FAQs here. Additional publications and information sources can be accessed here.

As the Suitability Requirement applies to any channel through which licensed or registered persons distribute or provide advice on investment products, the SFC has also provided tailored guidance to the industry for complying with the Suitability Requirement and other conduct and regulatory requirements applicable to online distribution and advisory platforms. The Guidelines on Online Distribution and Advisory Platforms are available here.

 

3.5022 s