A revised Code of Banking Practice, applicable to relationships between individual customers and authorized institutions under the Banking Ordinance (AIs), became effective as of December 1 2001. AIs generally have six months to comply with its terms.
Key changes reflected in the revised Code include the following:
- indemnity provisions in the banker-customer agreement should only allow for indemnification of costs and expenses which are of a reasonable amount and were reasonably incurred;
- aimed at assisting customers to compare charging structures between different lenders, AIs are required to quote interest rates using annual percentage rates (APR). AIs are not allowed to charge an APR of or exceeding 48% (which is presumed to be extortionate unless AIs can justify why such a high interest rate is not unreasonable or unfair in the circumstances);
- subsidiary credit, debit and ATM cardholders will not be liable for the debts incurred by primary cardholders;
- customer liability for unauthorized credit card transactions shall not exceed HK$500 ($64) (per credit card account), provided that the customer reports the card's loss or theft to issuer promptly;
- AI's debt collecting agents should be closely monitored to ensure they do not employ harassment or other improper tactics;
- clear and prominent disclosures of crucial aspects of electronic banking services before customers sign up for these, such as customer's liability for unauthorized transactions, applicable charges, personal data statements, customer's obligations regarding security, and means for reporting security-related incidents or complaints; and
- new provisions governing the application and use of stored value cards. Of note is a provision allowing customers who do not agree to significant variation of the applicable terms to be entitled to a full refund of the deposit and any residual value in such cards.