SFC to issue asset management rules in line with original proposals

Chris Hamblin

17 November 2017

The original propopsals - with certain modifications and clarifications - are to stand. The revised Fund Manager Code of Conduct, as it is known, and the amendments to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission have been published in the Government Gazette or, in the words of the SEC, have undergone 'gazettal.' The amendments to both codes of conduct become effective on 17 November next year.

The enhancements to the Code of Conduct aim to address conflicts of interest in the sale of investment products and force firms to divulge more information to customers at the point-of-sale by:

restricting each intermediary from representing himself/itself as 'independent' or using any term(s) with a similar inference when distributing an investment product if the intermediary receives commission or other monetary benefits in relation to distributing such investment product; or it receives any non-monetary benefits from any party or has close links or other legal or economic relationships with product issuers which are likely to impair its independence; and
requiring the intermediary to disclose the maximum percentage of any monetary benefits received or receivable that are not quantifiable prior to or at the point of sale.

The SFC will publish 'frequently asked questions' (and the answers to them) to provide further guidance to the industry about ways to implement the proposals. It is also consulting interested parties for the next couple of months about rules that it is proposing to govern the disclosure of monetary and non-monetary benefits by licensed or registered persons to discretionary account clients.