The Securities and Futures Commission (“SFC”) in May 2017 carried out a consultation on the proposed guidelines on online distribution and advisory platforms. In March 2018, SFC issued a consultation conclusion (“Consultation Conclusion”) on the above. It also took the opportunity to further consult the public on the offline requirements applicable to complex products.
In this latest consultation, SFC proposes to introduce a new paragraph to the SFC’s Code of Conduct to the effect that when an intermediary is to provide a client with offline services for complex products (other than derivative products traded on an exchange in Hong Kong or in a specified jurisdiction), the intermediary should (a) observe the suitability requirement (as set out in the SFC’s Code of Conduct; (b) provide sufficient information to the client on the key nature, features and risks of a complex product; and (c) provide warning statements, where appropriate.
The purpose of the above amendments is to align the regulatory requirement for both online and offline sale and to ensure a level playing field. The proposed amendments are also in line with the existing requirement that intermediaries should provide all relevant material information to clients and help them make informed decisions.
The Investment Products and Financial Services (“IPFS”) Committee of the Law Society has reviewed the Consultation Conclusion as well as the further consultation from the SFC. It has made further submissions, which was endorsed by Council.
A copy of the above submission is at http://www.hklawsoc.org.hk/pub_e/news/submissions/20180529.pdf