It is a non-statutory code, although compliance with it is expected of all AIs. It is monitored by the HKMA as part of its regular supervision, although, as I mentioned earlier, we have no formal, statutory mandate in this project. There is, I think, scope, as the Report advocates, for HKAB to take greater ownership of this code, particularly in the setting of standards – and in ensuring that these are high standards – and in monitoring and enforcing compliance. This would be consistent with the practice of banking associations in other jurisdictions, and it would be a logical development of HKAB’s role. A third area highlighted in the Consultant’s Report is consumer education in the field of banking services. This is a neglected subject in Hong Kong. The question of which organisation should take the lead in this is, of course, tied to the question of who should take on consumer protection. But, whatever the answer to the second question, it seems clear that HKAB would need to be involved in some form or another. This, in fact, reflects the practice among industry organisations in other jurisdictions, many of which have a strong tradition of producing plain-language factsheets, webpages and other resources on running personal finances, protecting one’s financial interests, and making the most of new forms of financial services. Moving away from the recommendations in the Consultant’s Report, there is, I think, a fourth area in which HKAB could become more involved. This is in the development of Hong Kong’s financial infrastructure.
Competition is a part of Hong Kong’s free market ethos. It is already strong in the banking sector here. We have witnessed it in particular – and occasionally with some concern – in the mortgage war and in the provision of credit card and other consumer services. Competition is being sharpened and stimulated by globalisation, which opens up hitherto restricted markets to businesses that are able to export their strengths, and by technological advance, which puts a premium on innovation and ingenuity. BIS Review 55/2001  1  For the economy as a whole, competition promotes efficiency in the allocation of resources and strength and flexibility in the face of change or crisis. In the banking sector, greater competition strengthens both individual banks, by forcing them to focus on their own core competence, and the banking system as a whole, by weeding out inefficiencies. For the consumer, competition promotes choice, quality and efficiency in products and services, and more reasonable costs. But competition, by its very nature, produces winners and losers. It also complicates the relationship between banks and customers, as services and fee structures become more complex and more sophisticated products proliferate. The general government policy on competition in Hong Kong is to adopt a sector-specific approach. We are not disposed to the idea of a general, overarching competition authority, since each sector of the economy has its own special needs and concerns.