This is the second mystery shopping programme conducted by the SFC, which found similar deficiencies to the first programme conducted in 2010. These include failings when taking into account the scope of clients’ circumstances when making a suitability assessment.
Both programmes also highlighted failings when products were recommended to clients, with many being given inaccurate explanations of the risks of products.
The 2014 report took 150 samples from 10 companies in Hong Kong, including fund management, investment advisory and brokerage firms, which were investigated by undercover shoppers to find out whether new regulations were being followed.
SFC chief executive officer, Ashley Alder, said: “Licensed firms must enhance their systems and controls to ensure full compliance with the selling practices requirements.
“Management are responsible for maintaining an adequate corporate governance structure and proper oversight of sales activity.”
Corporations are expected to take remedial action to address major deficiencies in light of the findings.
