On 29 Sep 2025, the SFC and HKMA announced a concurrent thematic review of intermediaries' distribution practices for non-exchange traded investment products, focusing on CIS suitability compliance. The review, prompted by a 76% year-on-year sales surge in CIS, will assess intermediaries' policies, systems, and adherence to suitability requirements under the Code of Conduct. Findings will inform potential industry guidance without amending existing regulations.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Purpose of Review
On 29 Sep 2025, the Securities and Futures Commission (SFC) and Hong Kong Monetary Authority (HKMA) announced the commencement of a concurrent thematic review targeting intermediaries' distribution practices for non-exchange traded investment products, specifically focusing on collective investment schemes (CIS). The review will evaluate intermediaries' compliance with suitability requirements under the Code of Conduct, including product due diligence, suitability assessments, and client information practices.
Background and Scope
This review follows the 2024 SFC-HKMA joint survey, which reported a 76% year-on-year increase in CIS sales. The thematic review will examine selected intermediaries' policies, systems, controls, and management oversight related to CIS distribution, with the objective of assessing adherence to regulatory standards governing client suitability and product suitability.
Next Steps and Industry Engagement
The SFC and HKMA will share the review findings with the industry and determine whether further guidance is necessary based on the outcomes. The review is a proactive enforcement initiative, not a regulatory amendment, and will be conducted without altering existing rules or requirements.
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