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Following is a question by the Hon Albert Chan and a written reply by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, in the Legislative Council today (December 13):
Question:
Many people have complained to me that in recent years banks have continually raised their service fees and charges, and a bank has even increased its charges on dishonoured cheques thrice in a year. As the Hong Kong Monetary Authority has indicated openly that it is the banks' business decision to revise their fees and charges, and the Authority is not in a position and has no right to interfere, it causes the public to worry that there is no effective mechanism to regulate the adjustment of fees and charges by banks. In this connection, will the Government inform this Council:
(a) of the number of complaints received, in each of the past three years, about banks' upward adjustment of fees and charges, together with a breakdown by the banks involved in these complaints;
(b) whether there is a policy on the regulation of fees and charges levied by banks; if so, of the details; if not, the reasons for that; and
(c) whether it will consider strengthening the regulation of banks to ensure that they will not levy unreasonable fees and charges, thereby safeguarding the interests of small depositors; if it will, of the details; if not, the reasons for that?
Reply:
Madam President,
The setting of fees and charges for banking services is a commercial decision for banks. Under the free market principle, the Administration does not consider it appropriate to interfere with such commercial decisions. Having said that, the Administration will continue to ensure that banks maintain a high degree of transparency with respect to their fees and charges for banking services. The objective is to provide consumers with adequate information so that they can make informed choices when selecting banking services. Our detailed responses are set out below -
(a) From time to time, the Hong Kong Monetary Authority (HKMA) receives complaints about the fees and charges of banks. Since the setting of fees and charges is a commercial decision, the HKMA would normally request the complainants to reflect their opinions to the banks concerned directly. Given the existing arrangement, the HKMA does not keep track of the number of complaints about fees and charges for banking services, and thus is unable to provide the requested statistics.
(b) As noted above, the setting of fees and charges is a commercial decision for banks. Under the existing legal framework, the HKMA does not have the authority, nor is it appropriate for it, to interfere with such commercial decisions. Nevertheless, the HKMA will ensure that banks comply with the transparency and notification requirements in relation to bank charges in the industry's Code of Banking Practice. In particular, institutions should make readily available to customers details of their fees and charges. They should also give at least 30 days' notice to affected customers before any change in the level of fees and charges takes effect. These requirements aim to provide customers with adequate information so that they can select the banking service most suitable for them.
(c) Under the free market principle, it is inappropriate for the Government to regulate the setting of bank charges and interfere with the commercial decisions of banks. We believe that competition will ensure that banks set their fees and charges at a reasonable level, having regard to their operating costs and the demand of their customers.
We would also like to point out that while banks review their fees and charges regularly, they generally exempt senior citizens and social welfare recipients from deposit account charges. Some banks also provide savings accounts which do not have low-balance account charges.
Ends/Wednesday, December 13, 2006
Issued at HKT 13:03
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