Hong Kong’s central bank to introduce framework on sharing scam-related losses

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The city’s financial regulator has received more complaints about scams this year, while overall losses grow

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Aileen Chuang

Published: 5:30pm, 27 Sep 2024

The Hong Kong Monetary Authority (HKMA) will start an industry consultation on a “responsibility framework” on scams, paving the way for commercial banks to share losses with customers affected by such transactions.

The framework will be confined to scams, or ruses to deceive people into providing personal information that leads to unauthorised fund losses. It will exclude financial fraud, which involves unauthorised access to personal information such as hacking.

“There are general guiding principles that we can actually prescribe” in terms of factors banks need evaluate when deciding if the loss should be compensated, HKMA’s deputy CEO Arthur Yuen Kwok-hang said on Friday. These include whether banks have effective systems of control, and if their customers have taken care to safeguard their personal information, he added.

Within that decision, it would also be proper to consider other special circumstances, such as whether their customers are from a vulnerable group, Yuen said at the annual conference of the Hong Kong Institute of Bankers. The aim is to clearly communicate the guiding principles regarding such cases, he said.

No one knows the funding needs and concerns better than the customers themselves. HKMA Deputy CEO Arthur Yuen Kwok-hang says. Photo: Xiaomei Chen

The consultation follows rampant scam and fraud cases in the financial hub as losses surged 67 per cent year on year to about HK$4.5 billion (US$575 million) in the first six months. Banks are doing a better job than expected at taking full responsibility and reimbursing lost funds, according to a survey by financial technology company FIS.