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5.
Banking (Amendment) Bill
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The following is the speech by the Secretary for Financial Services, Mr Rafael Hui, in moving the second reading of the Banking (Amendment) Bill 1996 in the Legislative Council today (Wednesday):
Mr President,
The Banking (Amendment) Bill 1996 seeks to provide a legal framework for the regulation of the issue of multi-purpose stored value cards and of foreign exchange and deposits brokers operating in the wholesale market. The Bill also streamlines the appeal and penalty provisions.
I am very grateful to the Chairman of the Bills Committee, Dr the Hon Huang Chen-ya, and Members of the Committee for their careful and meticulous consideration of the Bill. I would also like to thank the Hong Kong Association of Banks and the Hong Kong Foreign Exchange and Deposit Brokers Association for their useful comments on the Bill. The amendments to be moved at the Committee Stage are the product of dialogue in a series of meetings between the Administration, the Bills Committee, the banking and money broking industries, and prospective issuers of stored value cards over the past few months.
When the Bill was introduced into this Council last year, I said that the Administration would study Members' suggestion of limiting the maximum value that can be stored on single-purpose stored value cards as a means to protect cardholders. We have concluded that the regulation of single-purpose stored value cards, which is in fact similar to pre-payment for goods and services, is outside the scope of the Banking Ordinance. It has little to do with the traditional banking supervisory concern of protecting the stability of the banking and payment system. With the agreement of the Bills Committee, we have decided not to include the regulation of this kind of card in the Bill.
The Bills Committee considered that there should be adequate protection for the funds pre-paid by cardholders in the event of the liquidation of a bank issuer of stored value cards. In fact, in the case of cards where the value is originated and issued by the bank itself, the nature of the stored value issued is similar to deposits. We agree with the Bills Committee that such stored value should be given similar protection to deposits and should thus receive priority payment in the case of the bank's liquidation. I will be moving an amendment to include a new deeming provision to remove any uncertainty in this regard.
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