HKMA Communicates Expectations for Preparation Toward Benchmark Reform
HKMA issued a circular to authorized institutions on customer protection in respect of the reform of interest rate benchmarks. In the circular, HKMA reminded authorized institutions to make early preparations for the transition to alternative reference rates, to keep abreast of international and local developments of the reform of interest rate benchmarks, and to take these factors into account in their preparation for the transition. In line with this, HKMA reminded authorized institutions about certain customer protection principles for fair treatment of customers and customer communication and education.
HKMA reminded authorized institutions to uphold customer protection principles in line with the Treat Customers Fairly Charter and other applicable requirements throughout the processes of the reform and transition of interest rate benchmarks. Authorized institutions are reminded to act with due skills, care, and diligence in their approaches to the transition of interest rate benchmarks and when making decisions impacting customers, to reduce conduct risks. Authorized institutions are also reminded to manage the customer impact of the transition ahead of end of 2021, including identifying the extent of their clients’ exposures and ensuring that the associated risks of their clients are assessed and managed.
The circular states that authorized institutions are expected to develop robust customer communication programs for consumer education and outreach. They should be conducted through appropriate channels such as newsletters and frequently asked questions (FAQs). Authorized institutions should also provide customers with appropriate and accessible channels to make enquiries and complaint, and put in place relevant handling mechanisms/procedures, which should be proper and fair. Authorized institutions should also provide sufficient training and up-to-date information to all relevant frontline staff to ensure their relevant staff have adequate knowledge and competence to appropriately handle communications with customers.
Keywords: Asia Pacific, Hong Kong, Banking, Securities, Interest Rate Benchmarks, Conduct Risk, LIBOR, HIBOR, Benchmark Reforms, Alternative Reference Rates, HKMA
Previous Article
HKMA Grants Another Banking LicenseRelated Articles
APRA Publishes Results of Climate Risk Self-Assessment Survey
The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.
ACPR Publishes Updates Related to CRD IV and Covered Bonds
The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).
BIS Paper Contributes to Debate on Regulating NBFIs and Big Techs
The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.
EIOPA Publishes Guidance on Climate Change Scenarios in ORSA
The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).
EBA and ECB Respond to Proposals on Sustainability Disclosures
The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.
BIS Report Notes Existing Gaps in Climate Risk Data at Central Banks
A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.
EBA Publishes Multiple Regulatory Updates for Regulated Entities
The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.
EIOPA Issues SII Taxonomy and Guide on Sustainability Preferences
The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.
EESC Opines on Proposals on CRR and European Single Access Point
The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).
HM Treasury Publishes Multiple Regulatory Updates in July 2022
HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.
