Hong Kong SAR – SFC Consults on Competency Standards for Licensed Individuals

As previously promised by the SFC, a consultation paper has been published looking at proposals to update SFC entry requirements for licence applicants as well as the ongoing competency standards for individual practitioners (such as Responsible Officers and Licensed Representatives). The SFC has requested comments in writing to be submitted no later than 10 February 2021, and later in 2021 we should see the consultation conclusion paper issued together with the finalised Competence Guidelines and CPT Guidelines.

Summary of proposals

The consultation paper sets out a number of proposed changes to the Guidelines on Competence (Competence Guidelines) and the Guidelines on Continuous Professional Training (CPT Guidelines) which together set out the entry and ongoing competence requirements expected of persons engaging in regulated activities under the Securities and Futures Ordinance.

The proposals are as follows:

1.   Changes to the Competence Guidelines:

  • to raise the minimum academic qualification requirements for individuals and broaden the scope of recognised academic qualifications;
  • to introduce a full exemption from obtaining recognised industry qualifications for temporary licence applicants;
  • to refine the applicability of the conditional exemption from passing the local regulatory framework papers under paragraph (8) of Appendix E to the 2003 version of the Competence Guidelines for Licensed Representatives;
  • to elaborate on the relevant industry experience requirements;
  • to clarify the management experience requirements for Responsible Officers; and
  • to enhance the competence requirements for individuals who intend to advise on matters in relation to the Codes on Takeovers.

2.  Changes to CPT Guidelines:

  • to simplify the basis for the determination of the CPT obligation by requiring each individual practitioner to take a specific number of CPT hours annually;
  • to specify 10 CPT hours per calendar year as the minimum requirement for Licensed Representatives and Relevant Individuals (under the Banking Ordinance), and 12 CPT hours for Responsible Officers and Executive Officers;
  • to require that every calendar year each individual practitioner attend at least five CPT hours on topics directly relevant to the Regulated Activities they engage in, and those engaging in sponsor work take 2.5 hours of sponsor-related CPT, while those engaging in transactions related to the Codes on Takeovers take 2.5 hours of Codes on Takeovers-related CPT;
  • to require each individual practitioner to complete no less than two CPT hours on topics relating to ethics or compliance per calendar year;
  • to require each new individual practitioner in Hong Kong (excluding temporary licensees) to complete two CPT hours on ethics within 12 months as a one-off requirement; and
  • to update the list of topics relevant for CPT purposes in light of the market development. 

The SFC recognises that a certain amount of time will be required in order to make the required preparation and adjustments, therefore it is proposing to implement the revised Competence Guidelines and CPT Guidelines at least six months after their publication, and in any event no earlier than 31 December 2021.