Bank customers also bear a major responsibility in  BIS central bankers’ speeches  3  protecting their own interests and rights. Indeed I would argue that it is crucial for bank customers to become “smart and responsible” consumers of banking services. Incidentally, at the international level, the G20 in its High-level Principles on Financial Consumer Protection is also emphasising the need for financial consumer literacy. Let me use a couple of examples to illustrate this point. Before a customer shops with a new credit card, he should take time and effort to understand the key terms of the credit card, such as the interest rates for cash advances and any applicable charges for late payments etc. He should learn how to take good care of his credit cards and ATM cards to avoid theft or other kind of scams. When he logs onto internet banking, he should exercise care to avoid bogus bank websites and reduce the risks of being hacked. This is also very true when it comes to investment decisions. Investing one’s savings with the hope of generating higher returns than bank deposits is a natural and legitimate aspiration of most bank customers, but they must also understand the inevitable correlation between returns and risks. So they must use their best endeavours to understand the likely risks and returns of any investment products that are sold to them.
In modern times, most societies would demand proper protection of consumers when they purchase a wide variety of goods and services, such as food, electrical appliances, drugs, health care and financial services. Consumers, as compared to suppliers and their intermediaries, are normally in a disadvantaged position in terms of product knowledge and bargaining power. Therefore, they need to be protected from unscrupulous sales practices or misrepresentations. Regardless of what kinds of goods or services are involved, the basic principle in consumer protection is that consumers should be treated fairly. In essence, what it means is that consumers should be able to know what they are buying, the costs involved and all other relevant terms and features of the transactions and should not be subject to high handed sales tactics. In Hong Kong, when a customer walks into a typical retail bank, he or she can undertake a wide variety of financial transactions, ranging from conventional banking services, such as deposits, currency conversion, credit cards, remittances and loans, to the purchase of wealth management or insurance products. This is what we call “universal banking”, a regime in which banks operate like financial supermarkets. Naturally, banks like the universal banking regime as it offers non-interest income such as fees and commission as well as diversification of businesses. At the same time, customers also like universal banking as it offers great convenience in the form of a one-stop service instead of having to go through different firms for different types of financial transactions or products.