Hong Kong’s Code of Banking Practice Revised

The Hong Kong Association of Banks (HKAB) and the DTC Association (DTCA) launched the revised Code of Banking Practice (Code) on 10 December 2021. The revised Code took immediate effect with the Hong Kong Monetary Authority (HKMA) expecting authorised institutions (AIs) to fully comply with the new provisions as quickly as possible within 6 months. An extension of up to 12 months is allowed for those provisions which require system enhancements, other than sections 17 and 18 the extension period of which is 18 months. 

The revisions follow a review by the Code of Banking Practice Committee, comprising industry representatives and the HKMA. One main theme of the revisions is to enhance the communication of services terms and conditions and the provision of services and product information to customers. The objective is to enhance the protection to customers particularly in the digital banking environment in line with fintech developments, having regard to the needs of various types of customers.

Key points of the revisions are as follows: 

1. Enhancing customer experience and protection in digital banking services
   • Disclose product information effectively and clearly when undertaking promotions through social media. For example, AIs should consider the appropriateness of using social media for promoting products and services of a complex nature.
   • Issue warning messages on cyber threats, frauds, scams, bogus advertisements and other customer security risk events to all or the affected customers in prescribed circumstances. The objective is to alert customers of the relevant risks and the warning should include suggested measures which the customers should take to protect themselves.
   • Provide channels for the public to authenticate digital promotional activities and materials of AIs and third parties engaged by or collaborating with the AIs. It is up to the AIs to determine what channels are appropriate in the circumstances as long as they are convenient to use and their availability has been made clear to the public. AIs should ensure these channels remain available for a reasonable period of time after the conclusion of the relevant marketing activities.
   • Ensure information provided in an exclusively non-paper based format is provided to customers in a downloadable and storable format for future reference. Before using non-paper based format to provide information to customers, AIs should notify the customers in advance explicitly and the customers do not object to it.
2. Strengthening protection and transparency of banking services
   • Give customers reasonable opportunity to review the terms and conditions before applying for services or products, or executing a transaction. 
   • Enhance transparency of certain arrangements relating to credit cards, including the chargeback mechanism and the fees and charges relating to foreign currency transactions. 
   • Enhance information disclosure on local and cross-boundary transfers, including the time for effecting a payment instruction and for the recipient to receive the payment; the identity of the correspondent bank handling the payment; and the fees and changes payable by the customer.
   • Strengthen the procedures for handling mis-transfer of funds by customers. The procedures set out in "Handing Procedures for Following up Mis-transfer of Funds Reported by Customers" issued by the HKAB and DTCA are incorporated in the Code.
   • Provide timely notification to customers upon changes in promotional interest rates of deposit accounts unless the customers are already informed of the relevant changes at the time of deposit placement.
3. Further promoting financial inclusion 
   • AIs to take into account the needs of customers for physical banking services when closing, relocating or modifying their branch networks.
   • On equal opportunity and providing services to customers with impairment or special needs, the "Practical Guideline on Barrier-free Banking Services" and "Guideline on Banking Services for Persons with Intellectual Disabilities" issued by the HKAB and DTCA are incorporated in the Code¹.
   • Accommodate the needs of different customers when providing services or information through electronic means. For example, where electronic devices are used in branches or other face-to-face situation to present terms and conditions, AIs should provide customers with alternative means to review the terms and conditions upon request. 

HKMA also mentioned in its Press Release (link below) that other parts of the Code are being reviewed by the HKMA and the banking industry, and that details of their review will be announced in due course. 

Link to Press Release:

Hong Kong Monetary Authority - Enhancements to the Code of Banking Practice (hkma.gov.hk)

Link to revised Code:

Code of Banking Practice (hkma.gov.hk)

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¹ HKMA has issued a Circular dated 10 December 2021 drawing AIs' attention to the "Guideline on Banking Services for Persons with Dementia" issued by HKAB recently. HKMA expects AIs providing retail banking services to follow the principles and good practices set out in the Guideline. Other AIs are encouraged to observe. The Guideline is available at Guideline on Banking Services for Persons with Dementia.