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Press Release 06 February 2015

Revised Code of Banking Practice

The Hong Kong Association of Banks (HKAB) and the DTC Association (DTCA) today jointly announced the launch of the revised Code of Banking Practice (the Code) which will take effect from 6 February 2015. The revised Code has been produced following a comprehensive review of the existing Code by the Code of Banking Practice Committee (CPBC), which includes representatives from HKAB, the DTCA and the Hong Kong Monetary Authority.

The main objective of the current review is to clarify and enhance various provisions of the Code to provide more protection to customers in the light of developments in laws, regulations and practices relevant to the banking sector. These include the adoption of enhanced credit card practices across all card issuers in Hong Kong since 2013. Major improvements in the revised Code include the following:

• the extension of the Code from Authorized Institutions (AIs) to their non-AI subsidiaries and affiliated companies controlled by them which are not licensed, regulated or supervised by any financial regulators in Hong Kong where applicable when providing banking services in Hong Kong;

• the introduction of a new section to require AIs to observe additional general principles in treating customers fairly. The principles broadly mirror the G20 High-Level Principles on Financial Consumer Protection;

• the strengthening of the provisions pertaining to the disclosure of terms and conditions upon application and on request. These include a Key Facts Statement on interest rates, fees and charges for common loan products. A notice of any variation of the terms and conditions should show clearly the variation with an explanation in plain language, where appropriate and practicable, and the ways in which the customer may indicate refusal and the consequence;

• the enhancement of the provisions relating to the opening of accounts. There is more explanation on the customer due diligence requirements and the types of documents which may be required from customers or prospective customers for such purposes;

• the expansion of the section relating to residential mortgage lending to provide more options to customers. These include the option to adopt the master fire insurance policy of the property where this exists and is acceptable to the AIs upon mortgage applications and renewals of the fire insurance policy on the property; and

• the expansion of the card chapter to require AIs: (i) to obtain the consent of the customers for upgrade and replacement of credit cards; (ii) to terminate non-activated cards after reminders for activation have been sent to the cardholders; and (iii) not to levy annual fees on non-activated cards.

The Consumer Council and the Office of the Privacy Commissioner for Personal Data have been consulted during the development of the revised Code. Their comments have been taken on board as appropriate.

AIs are expected to take steps to comply with the revised provisions as soon as practicable and achieve full compliance within 6 months from the effective date at the latest. Another 6 months is allowed for compliance with those revised provisions which require system changes.

The CBPC will continue to review and develop the Code in response to market developments and changes in relevant laws and regulations, including the Competition Ordinance (Cap. 619) which is expected to become fully in force from mid-2015 at the earliest.

The revised Code can be viewed or downloaded from the respective websites of HKAB (at www.hkab.org.hk) and DTCA (at www.dtca.org.hk). In addition, all AIs should make copies of the Code available to customers or inform them how to obtain copies.

For any questions, please contact Mr. Henry Chan, Secretary of HKAB (at 2521 1169) or Mr. P.C. Lund, Association Secretary of DTCA (at 2526 4079).

The Hong Kong Association of Banks

The DTC Association
6 February 2015

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