Banks will be required to disclose the commission they get by selling investment-linked assurance products, the Hong Kong Monetary Authority has ruled after it received many complaints from the public.
The authority issued a circular to lenders yesterday requiring them to disclose important facts when selling such long-term investment products. They include ad hoc charges, fees for early termination and the effect of applying the so-called premium holiday, as well as the commission received by lenders.
Banks will also have to consider the purchasing power of each customer and caution clients when they put too much of their assets into one investment.
The banking regulator said such investment products aroused concerns since their relatively complicated structure and features - such as complex fees and charges and long lock-in period - are not easily understood by customers.
They may not be properly disclosed and explained to customers during the selling process, the watchdog said.
Local lenders sold 26,000 such policies in 2011 and 22,000 in 2012. Complaints received by the authority jumped from six in 2010 to 30 in 2012.
The HKMA found that several banks had failed to sufficiently explain the nature and charges of such schemes. VICTOR CHEUNG