Authorised Institutions (AIs) are expected to comply with the revised Code of Banking Practice (Code) within 6 months of 6 February 2015 and to implement any system changes within 12 months. A key change to the Code is its extended scope of application; AIs will be required to ensure that their subsidiaries and affiliated companies controlled by them comply with the Code while providing banking services (e.g. lending) in Hong Kong. The Code, issued by the Hong Kong Association of Banks and the DTC Association, has been endorsed by the Hong Kong Monetary Authority which will monitor AIs’ compliance with the Code as part of its ongoing supervisory activities.

The main reason for the revision of the Code is to provide enhanced financial consumer protection in day-to-day business dealings, as well as to promote, and align with, international good banking practices. It also represents another step, following the launch of the Treat Customers Fairly Charter in 2013, to strengthen banks’ corporate culture in respect of sound dealings with customers.

Other principal changes to the Code include:

  • Incorporation of G20[1] good banking practices to guide AIs in providing better consumer protection and to endorse banking practices of an international standard;
  • Introduction of a new standardised Key Facts Statement requiring AIs to set out major terms and conditions of loan products for consumers, which will boost disclosure and transparency;
  • Enhancement of AIs’ credit card practices in the interests of consumers. For example,  consumer consent will need to be obtained before an AI can issue an upgrade or replacement card; and
  • Requirement that AIs provide more explanation regarding consumer due diligence during the account-opening process.

[1] G20 High-level Principles on Financial Consumer Protection published in October 2011