The exercise, due to begin this month, is thought to be the first time regulators in the Chinese territory have used people posing as customers to ensure rules are being followed.
In a letter to advisers notifying them of the exercise, the Securities and Futures Commission and Hong Kong Monetary Authority warned intermediaries they may face further action following a visit.
The letter said the ‘mystery shopping programme’ will assess the extent to which new regulations were being followed, stating: “Depending on the findings, certain cases may necessitate follow-up action with the intermediaries concerned.”
How well advisers complied with know your client procedures, risk disclosure and suitability of investment recommendation requirements would be under particular scrutiny.
The move, which has angered many advisers, appears to be part of a more hardline approach being adopted by Hong Kong regulators against IFAs.
Recent examples of this tougher stance include a major change in the licensing requirements for IFAs and the introduction of commission disclosure rules.
Mystery shopping, though new to Hong Kong, is established practice in some jurisdictions such as the UK.
