Non-financial misconduct in Hong Kong: where could future enforcement action be concentrated?

UK FCA Director of Enforcement Mark Steward recently said that the FCA is not a "guardian of morality".  It focuses on misconduct that raises concerns about fitness and propriety specifically to carry out regulated activities - as distinct from "minor temperamental incidents of misbehaviour".

There's yet to be clarity on this from Hong Kong regulators - as with regulators in many other jurisdictions. But Hong Kong does have rules that might cover the ground and afford substantial scope for enforcement action in this space. The SFC's general principles are confined to conduct related to a firm or individual's business activities. But the SFC's fitness and propriety requirements arguably go further, bringing in questions of reputation, character and integrity.

Likewise, the HKMA requires firms to have codes of conduct. These are required to cover not just honesty and diligence but also matters like "integrity" and "responsible citizenship".

But what form might this action take?

Future action likely won't concentrate on isolated instances of lapses in individual judgment.

Hong Kong regulators are likelier instead to examine instances where non-financial misconduct indicates systemic or broader cultural issues, and act against firms in respect of those wider issues.

We examine these issues along with the roles of the HKMA and SFC and Hong Kong whistleblowing protection measures in the latest podcast episode in our series on global approaches to these subjects.  Here you can listen to my discussion with Linklaters Hong Kong partners Andrew Chung, Denise Fung and Sumit Indwar.  Remember to like, share and subscribe to our podcast for more insights from us.

And click here for our global comparative review.