The Securities and Futures Commission (SFC) recently released its Consultation Conclusions on Proposed Enhancements to the Competency Framework for Intermediaries and Individual Practitioners. The changes to the existing Guidelines on Competence (Competence Guidelines) and Guidelines on Continuous Professional Training (CPT Guidelines) (together the “Guidelines”) will take effect in January 2022.
The changes impact the competence and ongoing training requirements for new and existing Responsible Officers (ROs) and Licensed Representatives (LRs) of Licensed Corporations (LCs), as well as Executive Officers (EOs) and Relevant Individuals (Rels) of Registered Institutions (RIs). There will also be enhanced competence requirements for individuals who advise on matters or transactions falling within the ambit of the Codes on Takeovers and Mergers and Share Buy-backs (Takeovers Codes). For context, the existing Competence Guidelines and CPT Guidelines have been in place for more than 18 years. They are being updated by the SFC in view of the changing regulatory landscape, evolving financial markets and development of new financial products.
In our new client alert published on InsightPlus, we outline some of these key changes, covering the competence requirements for ROs, EOs, LRs and Rels, which include:
- Academic/professional qualifications
- Relevant industry experience, management experience
- Recognised industry qualification (RIQ), Extra Continuing Professional Training (“Extra CPT”), or Passing local regulatory framework paper
We also include the existing requirements for comparative reference. Other details covered in the client alert include:
- Enhanced competence requirements in relation to advising on the Takeovers Codes
- Grandfathering arrangements (as to how the requirements affect existing licensed/formerly licensed personnel)
- CPT Guidelines changes
The SFC has acknowledged that the changes to the Guidelines are extensive and accordingly, it may publish further guidance in the form of frequently asked questions or provide separate training sessions to facilitate a more complete understanding of the new requirements. Financial intermediaries and industry practitioners subject to the Guidelines should:
- Continue to monitor developments from SFC.
- Consider the new or revised requirements and ensure that they are reflected in human resource guidelines as well as training policies and procedures.
- Consider the implications on existing and new personnel (including the new examination requirements on personnel involved in Takeovers Codes matters).
- Revisit existing training programs to cater for the new training requirements (including on ethics, compliance, regulatory compliance, and other topics that are directly relevant to the regulated activities in question) for new joiners and existing personnel.
You can read our full client alert – Changes to the competence and training requirements for personnel of Hong Kong financial intermediaries on InsightPlus.