TRADE AND INDUSTRY
Consumer Council
The Consumer Council, established in 1974, is a statutory body charged with the responsibility of protecting and promoting the interests of consumers of goods, services and immovable property.
The council's chairman, vice-chairman and 20 members are appointed by the Governor from a wide cross-section of the community. A chief executive heads the 101-strong office, which is divided into five sections: administration, complaints and advice, information and publication, survey, and research.
The council is engaged in a wide spectrum of consumer protection activities. These include developing new consumer protection initiatives, conducting studies on the state of competition and trade practices of various business sectors which affect consumer interests, mediating in disputes between consumers and businesses, conducting product testing and surveys on products and services, disseminating consumer information and advice to enhance consumer awareness, and promoting consumer well-being and sustainable consumption lifestyles.
The year 1994 marked the 20th anniversary of the council. A territory-wide consumer education and publicity campaign featuring 'fair trading' was launched in June to celebrate the occasion. This theme will continue to guide the council's efforts in trade liaison and consumer education for the coming two years.
The council continued to pursue its research into the competition environment in the domestic market. Sectorial studies on the banking sector, the driving instruction industry and the supermarket industry were completed. The study on gas supply was near completion at the end of the year.
The council's first competition study report, entitled Are Hong Kong Depositors Fairly Treated?, was released in February. The two main issues addressed by the report included the level of interest rates governed by the Interest Rate Rules (IRR) made by the Hong Kong Association of Banks and the extent of disclosure of financial information by the banking sector in Hong Kong.
The report concluded that the IRR, the barrier imposed by the regulatory framework on entry to the market for retail deposits, and the lack of product substitutes had enabled the banks to profit at the expense of depositors. With the improvements over the recent years to the systems of banking supervision and monetary management, the existence of the IRR was considered to be no longer justified and should therefore be abolished in phases.
On the question of financial disclosure, the report observed that banks in Hong Kong generally published less information than their counterparts in other major financial centres. It concluded that more disclosure would be beneficial to the stability of the financial sector. In July, the government responded to the report. Having regard to the need to balance the competing considerations of introducing more competition but maintaining the stability of the monetary and banking systems, the government accepted the recommendation to remove the interest rate cap on time deposits in phases. Instead of starting in 1995 as recommended by the report, the liberalisation started in October 1994. Further steps will be considered after the impact of the deregulation of time deposits has been fully assessed.
The government also reaffirmed its commitment to greater financial disclosure by banks, previously recommended by a government working group prior to the release of the Consumer Council report. The first phase of improvements in financial disclosure will take
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