Hong Kong publishes revised code of banking practice

Institutions are expected to achieve full compliance within 6 months.

The Hong Kong Association of Banks (HKAB) and the DTC Association (DTCA) have published a revised Code of Banking Practice to strengthen customer protection in lieu of the evolving digital banking landscape.

The revised code comes into effect from 7 December. Authorised institutions are expected to achieve full compliance with the new provisions as quickly as possible within 6 months of the effective date. There is an extension of up to 12 months for provisions requiring more extensive system enhancements or 18 months for specified sections mentioned in the code.

HKAB chairman Sun Yu said that the revisions are aimed at strengthening the security of digital banking services.

“The revised code places strong emphasis on increasing the transparency of banking services, promoting financial inclusion and treating customers fairly for enhanced customer experience,” Yu said.

ALSO READ: Hong Kong banks lead adoption of Generative AI: survey

Amongst major enhancements include enhanced disclosure requirements in digital banking services, which now incorporated the updated G20/OECD High-Level Principles on Financial Consumer Protection as general principles.

Institutions are also now required to prominently and clearly disclose product information to facilitate customers’ understanding. 

The interface for internet banking platforms is also required to be designed in a way that prompts customers to review product information and application details before proceeding any transaction.

Regarding transparency, banks are now required to provide reasons why they declined to open, inhibit, or close a customer’s account. They must also notify in advance of any significant changes to lending terms and conditions; if there are any changes resulting in increase of overall interest rates; and when exercising the right of set-off; notifying customers of significant changes to lending terms and conditions, or any changes resulting in the increase of overall interest rates.

ALSO READ: Tokyo seeks “friendliest city” title for local, foreign startups

The new code also strengthens protection in card services, by requiring card issuers to obtain agreement from cardholders before increasing their credit limits.

Card issuers must also provide convenient channels for cardholders to request credit limit reductions; must enhance security risk advice provided to cardholders, particularly concerning authentication factors used for transactions, and their responsibilities when detecting suspicious card transactions; and must ensure that their contact details are updated.