Provision of Information in Non-paper Based Format

18.1. Where information referred to in sections 5.2, 5.10, 5.11, 5.12, 6.3, 13.4, 21.3, 23.5, 24.2, 24.3, 27.1, 27.6, 27.7, 27.8, 30.4, 36.3 or 46.8 is provided in an exclusively non-paper based format, institutions should ensure the information is provided in a format that allows customers to, at the time of provision, directly download and store the information for future reference. Institutions which provide the information to customers in a non-paper based format should so notify the customers in advance explicitly and the customers do not object to it. For section 13.4, such prior notification may not be required if customers’ preference for receiving non-paper based information is clear to the institutions. Furthermore, institutions should also cater for the needs of customers for information to be supplied in a paper-based format under special circumstances.

18.2. Where information referred to in sections 5.2, 5.10, 5.11, 5.12, 6.3 or 30.4 is provided in a non-paper based format which allows customers to directly download and store the information subsequent to the time of provision, institutions should allow the customers to continue to do so within a reasonable specified timeframe and the information must remain unchanged during the specified timeframe. Institutions should clearly inform customers of the specified timeframe within which the information will be available for download and that the customers may not be able to access or download such version of the information subsequent to the expiry of the specified timeframe.

Chapter 2 - Accounts and Loans

19.1. Institutions should satisfy themselves about the identity of a person seeking to open an account in order to protect their customers, the public and themselves against misuse of the banking system.

19.2. Institutions should comply with the customer due diligence requirements set out in Schedule 2 of the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (Cap.

615). The HKMA’s Guideline on Anti-Money Laundering and Counter-Terrorist Financing provides guidance in relation to these requirements, which include verifying the customer’s identity by reference to documents, data or information provided by a reliable and independent source, such as passports or identity cards. The residential address, and information relevant to understanding the purpose and intended nature of the business relationship, such as the customer’s occupation, should also be obtained.

19.3. Institutions should provide to customers or prospective customers upon request general descriptive information about the customer due diligence requirements.

20. Closing of Accounts

20.1. Either the customer or the institution may end any banking relationship at any time subject to any specific terms and conditions relating to the closing of accounts.

20.2. Institutions should not close a customer’s account without first giving at least 30 days’ notice or upon the customer’s request a longer period of notice where it is practicable to do so. This will not apply in exceptional circumstances, for example, where the account is being used or is suspected of being used for illegal activities. Institutions should, where appropriate and not against the law, also consider providing a reason to the customer for closing the account.

21. Operation of Accounts

21.1. In addition to the detailed terms and conditions, institutions should make readily available to customers general descriptive information about the operation of their accounts. Such information should include -

(a) any regular fees;

(b) any minimum balance requirement, and the charges payable if the balance falls below the prescribed minimum;

(c) treatment of inactive or dormant accounts (see section 6.7 above);

(d) the usual time taken for clearing a cheque or a payment instrument credited to the account;

(e) any rights of set-off claimed by the institution (see section 22 below); and (f) the closing of accounts (see section 20 above).

21.2. Institutions should make readily available to customers of joint accounts general descriptive information about the operation of their accounts. Such information should include -

(a) the rights and responsibilities of each customer of the joint account;

(b) the implications of the signing arrangements to be specified in the account mandate for the operation of the joint account, particularly that any transactions entered into by the authorized signatory or signatories will be binding on all account holders;

(c) the manner in which such authorized signatory or signatories or signing arrangements can be varied;

(d) the nature of liability for indebtedness on a joint account; and

(e) any rights of set-off claimed by the institution in respect of joint accounts (see section 22 below).

21.3. Institutions should provide customers with statements of account at monthly intervals unless - (a) a passbook or other record of transactions is provided;

(b) there has been no transaction on the account since the last statement; or (c) otherwise agreed with the customer.

Where institutions do not post or email statements of account to customers but require them to access the information electronically, institutions should advise customers concerned when the statements are available for such access.

21.4. Institutions may provide statements of account in a non-paper based format to customers where the institutions have explicitly notified the customers at the time of application for the accounts or in advance at any other time that non-paper based statements will be provided and the customers are given an option to receive paper statements instead. When providing the notice, institutions should also advise the customers of the fees and charges, if any, for choosing to receive or to continue to receive paper statements and the procedures to choose to receive paper statements subsequently.

21.5. Before closure of bank accounts, institutions should remind the customers to download and store their non-paper based statements of account, if applicable, for record purposes and that the customers will no longer be able to access their statements after closure of the accounts. Institutions should allow reasonable time for the customers to download and store their non-paper based statements or provide paper statements to the customers upon their request.

21.6. For retail customers who have opted for statements of account in a non-paper based format for integrated accounts, Hong Kong dollars current accounts and/or Hong Kong dollars savings accounts, institutions should allow the customers to access their non-paper based statements from and store them on the Internet banking platforms for a minimum period of 7 years. Institutions should, starting with the non-paper based statements made available on their Internet banking platforms as of 31 March 2020, incrementally accumulate non-paper based statements for a cycle period of at least 7 years. The retrieval period of the statements of other types of accounts should be sufficiently long to allow reasonable access by customers. Institutions should follow the relevant guidelines issued by the industry Associations from time to time.

21.7. Institutions should advise customers to examine their statements of account and allow a reasonable period of time of at least 90 days for them to report any unauthorized transactions in the statement.

Customers should be warned that the institution would reserve the right to regard the statement as conclusive should they fail to report any unauthorized transactions within the specified period.

Institutions should not, however, avail themselves of this right in relation to -

(a) unauthorized transactions arising from forgery or fraud by any third party including any employee, agent or servant of the customer and in relation to which the institution has failed to exercise reasonable care and skill;

(b) unauthorized transactions arising from forgery or fraud by any employee, agent or servant of the institution; or

(c) other unauthorized transactions arising from the default or negligence on the part of the institution or any of its employees, agents or servants.

22. Rights of Set-off

22.1. The descriptive information made available to customers (see section 21 above) should include clear and prominent notice of any rights of set-off claimed by the institution over credit and debit balances in different accounts of the customer.

22.2. In particular, it should be made clear to customers of a joint account whether the institution claims the right to set off the credit balance in that account against the debit balance in other accounts which may be held by one or more of the holders of the joint account.

22.3. Institutions should set out in their terms and conditions the circumstances under which they would exercise their rights of set-off.

22.4. Institutions should inform the customer promptly after exercising any rights of set-off.

23. Deposit Accounts

23.1. Institutions should publicize or display in their principal place of business and branches and provide on their websites and principal Internet banking platforms the rates offered on interest-bearing accounts, except where rates are negotiable.

23.2. Institutions should make readily available to customers the following information on all deposit accounts -

(a) the interest rate applicable to their accounts;

(b) the basis on which interest will be determined, including where relevant the APR (see section 12 above), whether interest will be paid on a simple or compound basis and the number of days in the year (in both ordinary and leap years) that will be used for the calculation;

(c) frequency and timing of interest payments; and

(d) the basis on which fees and charges on deposit accounts will be determined.

23.3. Institutions should provide the following additional information to customers in respect of time deposits -

(a) the manner in which payment of interest and principal will be made and the costs associated with different methods of withdrawing such funds (for example, by means of cashier’s order);

(b) the manner in which funds may be dealt with at maturity (for example, automatic rollover, transfer to savings or current accounts etc.);

(c) the interest rate, if any, that will apply on time deposits which have matured but have not been renewed or withdrawn; and

(d) the charges and/or forfeiture of interest which may arise from early or partial withdrawal of deposits.

23.4. If the date of maturity of a time deposit falls on a day which is not a business day, the deposit shall be deemed to mature on the succeeding business day.

23.5. Institutions should provide customers with a contemporaneous receipt or advice for deposits at call or notice or fixed deposits which should show the date of deposit. In the case of fixed deposits, the receipt or advice should specify the rate of interest and a single date of maturity. In the case of call deposits, the receipt or advice should specify the initial rate of interest and the period of notice required to uplift the deposit.

23.6. Institutions should inform customers of changes in interest rates (other than those which change on a daily basis) and the effective date by notices in the main offices, branches, their websites and principal Internet banking platforms, or on the statements of account, or by advertisements in the press. For changes to promotional interest rates after customers have placed deposits with institutions (except for those changes of which the customers are already informed at the time of deposit placement), institutions should adopt effective means of notification which would provide reasonable assurance that their customers will be informed of the change and which do not rely unduly on the customers’

own initiative. Individual notification to customers (whether by written notice, message on statement of account, statement insert, e-mail or SMS message) are considered as effective in fulfilling this purpose.

23.7. Institutions should at all times comply with any relevant regulatory requirements of the HKMA or the Securities and Futures Commission on risk disclosure for structured deposits (e.g. deposits or accounts involving derivatives, such as equity, index, commodity, credit, currency and interest rate-linked deposits). Institutions should make a risk disclosure statement in advertising and promotional materials relating to structured deposits. Such statement should include -

(a) an explicit warning of the risks of dealing in the structured deposits; and

(b) information on whether the principal, interest or both may be subject to possible loss arising from the structured deposits.

24. Loans and Overdrafts

24.1. Approval of loans or overdrafts is subject to institutions’ credit assessment which should take into account the applicants’ ability to repay. In doing so, institutions may have regard to such factors as -

(a) prior knowledge of the customer’s financial affairs gained from past dealings;

(b) the customer’s income and expenditure;

(c) the customer’s assets and liabilities;

(d) information obtained from credit reference agencies; and (e) other relevant information supplied by the applicant.

24.2. Institutions should endeavour to ensure that a prospective borrower understands the principal terms and conditions of any borrowing arrangement. The following information should be provided upon application for a loan or overdraft or, where relevant, in a subsequent offer, and on request -

(a) the rate of interest for the loan or overdraft, and whether it may be varied over the period of the loan;

(b) a brief explanation of the basis on which interest will be determined and when it will be payable, including where relevant the APRs (see section 12 above), and the number of days in the year (in both ordinary and leap years) that will be used for the calculation;

(c) all fees and charges which will apply, and a brief explanation of the basis on which such fees and charges will be determined and when they will be payable;

(d) the specified period during which the loan offer may be accepted by the prospective borrower;

(e) details of terms of repayment, including the loan tenor and, where relevant the instalments payable by the customer;

(f) any overriding right to demand immediate repayment;

(g) other significant features such as security requirements, late payment charges and the charges or termination fees for early repayment, and a brief description of the basis on which the late payment charges and the charges or termination fees for early repayment will be determined and when they will be payable; and

(h) the institution’s right, in the event of default of the customer, to set off any credit balance in other accounts held by the customer (or in a joint account of the customer) against the amount due to the institution.

24.3. In addition to the information set out in section 24.2 above, the following information on instalment loans (i.e. loans repayable by equal instalments) should be provided to customers upon application for a loan or in a subsequent offer, and on request -

(a) where applicable, the loan balance used as the basis for calculating the fees and charges under sections 24.2(c) and 24.2(g) above and the timing when the loan balance is determined; and

(b) the apportionment of interest and principal for each loan repayment throughout the loan tenor and the method of apportionment.

24.4. Institutions should, in addition to complying with section 5.2 above, provide a consistent and succinct summary of major terms and conditions to customers in the form of a Key Facts Statement when they apply for loans and overdrafts and on request. A Key Facts Statement should include information which is of significant concern to customers, such as interest rates, fees and charges, and should follow the standard template provided in the relevant guidelines issued by the industry Associations.

24.5. For loans with a specified maturity date, institutions should quote the APRs for different tenors which are commonly selected by customers.

24.6. For loans which are revolving in nature (excluding overdrafts), institutions should quote the APR calculated in accordance with the method set out in the relevant guidelines issued by the industry Associations together with the annual fee. The APR and the annual fee should be shown with equal prominence whenever interest rates are quoted.

24.7. Where there is more than one applicable interest rate during the loan period, institutions should quote an APR which takes into account all the applicable interest rates for different parts of the loan period and is calculated in accordance with the method set out in the relevant guidelines issued by the industry Associations.

24.8. The number of days used as the basis of interest calculation for loans and deposits should be consistent.

24.9. Where the rate of interest for a loan or an overdraft is based on a reference rate, for example, best lending rate, institutions should notify customers of any changes in the reference rate as soon as practicable, unless such changes have been widely publicized in the media.

24.10. Institutions should notify customers promptly when accounts without pre-arranged credit facilities are overdrawn and the related fees and charges.

24.11. If institutions intend to charge a default rate of interest and make other charges in accordance with the relevant terms and conditions when customers overdraw their accounts or exceed an agreed borrowing limit, institutions should advise customers in advance of their right to impose such default interest and charges and inform customers promptly after exercising such right.

24.12. Institutions should advise customers to inform them as soon as possible of any difficulty in repaying or servicing the loan over the credit period.

25. Residential Mortgage Lending

25.1. This section applies to any mortgage loan secured on a residential property / car park regardless of the purpose of the loan or the location of the residential property / car park. In the case of an individual providing (or proposing to provide) a residential property / car park as third party security, section 27 below will apply.

25.2. Institutions should provide customers and prospective customers with information similar to that in section 24.2 above upon application for a mortgage loan secured on a residential property / car park or, where relevant, in a subsequent offer and on request. In addition, institutions should warn customers that the mortgage loan is secured on the property in question and that default may result in the institution taking possession of, and selling, the property.

25.3. In the case of an “All Monies” mortgage (i.e. a mortgage which will secure all amounts payable by the borrowers) executed on or after 4 July 2005 involving more than one borrower, the amount secured under the mortgage should not exceed the amount of money, obligations and liabilities owing or incurred at any time by the co-borrowers jointly. This does not restrict a co-borrower acting as surety from separately guaranteeing or securing the other’s obligations in a transparent manner which complies with the provisions of section 27 below.

25.4. Institutions should provide customers with revised particulars of instalments payable by the customer after every adjustment of the interest rate.

25.5. Institutions should inform customers and prospective customers if they have to pay for the legal expense of both the solicitors who represent themselves and the solicitors who represent the institutions to prepare mortgages on properties.

25.6. Institutions should also inform customers or prospective customers that they have the right to employ separate solicitors for themselves, and the cost implications of doing so.

25.7. Customers may, from institutions’ approved lists, appoint solicitors to represent both themselves and the institutions (unless it is the institution’s policy to require separate legal representation) and employ insurers which they think fit to insure the properties against fire or other serious damage. The coverage of such approved lists should be sufficiently wide to allow customers to make a choice. In the case of insurers, the approved list should include insurers which are not related to the institution.

25.8. Institutions should inform customers and prospective customers that they may employ solicitors not on the approved lists of institutions (a) to represent themselves, and, (b) if the institutions’ policy so allows to represent both themselves and the institutions, and if they do so, the procedures involved, the nature and amount of the fees and charges levied by the institutions, and the nature of any extra fees that may be charged by the solicitors which are known to the institutions including the costs for the additional work for each solicitor in reviewing the other solicitor’s documentation under scenario (a).

25.9. If it is the institutions’ policy to require separate legal representation or to employ only solicitors on

25.9. If it is the institutions’ policy to require separate legal representation or to employ only solicitors on