"Expanding Access to Financial Protection"
KE Newsletter - Issue 18, April 2020
Justice should rely on universal participation and should be accessible to all.In a boost for investor protection, the Hong Kong Financial Dispute Resolution Centre (FDRC) adopted new rules in January 2018 that enabled consumers to claim more and benefit from a longer window for lodging claims. The new rules have led to many more consumer claims being resolved and have also strengthened the FDRC’s role by enhancing access to its services and increasing the amounts claimable. These policy changes have also enhanced Hong Kong’s reputation as a global financial centre.
Research conducted by Professor Shahla Ali of the Department of Law directly impacted the FDRC’s ‘Proposal to Enhance the Financial Dispute Resolution Scheme’, which was launched in October 2016, and the FDRC’s consultation conclusions, which were published in August 2017. In these conclusions, the FDRC adopted three key reforms. The first was to increase the maximum claimable amount to HK$1,000,000 (up from HK$500,000 in the original rules). The second was to extend the time limit for lodging a claim to 24 months (up from 12 months) from the date of purchase or the date of first knowledge of the loss, whichever is later. Thirdly, the FDRC expanded its coverage to small and medium-sized enterprises (SMEs) that have a relationship with financial institutions.
Professor Ali proposed six principles for reforming financial dispute resolution following the global financial crisis of 2008, which saw many investors in Hong Kong and beyond suffer significant losses, many of which were attributed to a lack of transparency in the financial system and limited protection for investors. The principles were independence, impartiality, accessibility, efficiency, fairness and equity emerging from the view that justice should rely on universal participation and should be accessible to all.
“In 2008, there was no systematic mechanism to handle consumer financial claims against banking institutions in many jurisdictions including Hong Kong,” said Professor Ali. “Retirees and others had to search for recourse. This was true in many other parts of the world. Why not learn from one another about the principles at play, share what is working and build stronger institutions?” ... Click here to read the full text.