XN000022-1996-05-22 — Page 65

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Reply:

The Code of Banking Practice (the Code) covers the most commonly used banking services available to personal customers such as deposits, loans and credit cards. All issues raised in the question, apart from the first one, have been included in the draft outline of the Code. The issue of legal tender notes raised in part (a) of the question is specifically regulated by the Bank Notes Issue Ordinance and is outside the scope of the Code. In this connection, nothing in the laws of Hong Kong requires bank notes to be sold at their face value. There is indeed an established market for the sale of new and used notes as collectors' items where notes are transacted at prices different from their face value. The pricing of the notes sold to, for example, collectors remains a matter for the note-issuing banks.

The Working Group on the Code (the Working Group) is consulting the banking industry associations and the Consumer Council on the draft outline before proceeding to the detailed drafting of the Code. We are therefore not in a position at this stage to give definitive statements on specific recommendations on issues raised in parts (b) to (e) of the question. Nevertheless, the areas being considered by the Working Group in relation to these issues (using the same numbering as in the question) are as follows:

(b)

(c)

The Working Group will consider the need for authorised institutions (Als) under the Banking Ordinance to provide general descriptive information to customers about the retail banking products being offered. In the case of loans and credit cards, this information may include, among other things, the basis on which interest will be calculated (including the need to specify the annualized percentage of interest) and the related fees and charges (including the penalty charges for early redemption or late payment);

The Working Group will consider the need for the terms and conditions in contracts between Als and their customers to be expressed clearly in plain language to the extent that it is consistent with the need for legal certainty;