The Financial Services Commission decided to allow the sale of high-risk financial investment products only at a small number of key bank branches. This regulatory improvement comes about a year after the Hong Kong H Index equity-linked securities (ELS) incident.
According to the financial authorities on the 30th, the Financial Services Commission plans to announce improvements to the sale system of high-risk financial investment products by banks in February. The improvement plan is expected to contain a provision allowing the sale of high-risk products only at designated counters separated from general counters within the key branches. Once the scheme is implemented, banks will be able to sell high-risk products, including ELS, which have a high likelihood of principal loss, to consumers only at designated key branches. In addition, key branches must visibly differentiate between general counters and high-risk product sales counters. Detailed criteria for designating key branches will be established by the Financial Services Commission.
A Financial Services Commission official noted, "We are considering a plan to make the counters selling products with potential principal loss look different, while taking into account the distribution of branch numbers by region."
This improvement plan is a follow-up to criticisms that incomplete sales occurred at bank offline sales points during the Hong Kong H Index ELS incident in 2023. At that time, some investors claimed, "I thought the product sold by the bank was guaranteed principal." The Financial Services Commission also considered the option of completely banning the sale of high-risk products by banks but decided on a policy direction with restrictions on sales at key branches after gathering opinions from various stakeholders, including industry, academia, and consumers.
Meanwhile, according to financial authorities, as of September last year, the principal of accounts confirmed to have losses among those linked to the Hong Kong H Index ELS was 10.4 trillion won, and the loss amount was 4.6 trillion won.