New Competency Framework to Take Effect from January: SFC

Raising professional standards is crucial to maintain quality markets, particularly in view of the rapidly evolving financial landscape, says SFC chief Ashley Alder.

Hong Kong’s SFC (Securities And Futures Commission) has released consultation conclusions on proposals to update its entry requirements for licence applicants and its ongoing competency standards for corporations and individual practitioners.

The conclusions result from a December 2020 consultation on proposed enhancements to the competency framework for intermediaries and individual practitioners.

The SFC says the industry generally welcomed the proposals, which included raising the minimum academic qualification requirements for individuals, broadening the scope of recognised academic qualifications, clarifying the management experience requirements for responsible officers (ROs) and enhancing the competence requirements for individuals advising on matters in relation to the Codes on Takeovers.

“Raising the professional standards of our industry practitioners is crucial to maintain quality markets, particularly in view of the rapidly evolving financial landscape,” said SFC chief Ashley Alder. “We are pleased that the industry shares this vision and overwhelmingly supports our proposals.”

The baseline academic qualification requirements will be raised to require at least the attainment of Level 2 in either English or Chinese as well as in Mathematics in the HKDSE or equivalent. As proposed, the scope of recognised academic qualifications will be broadedned to cover degrees in other disciplines.

Based on the feedback, the SFC has said it will recognise post-graduate diplomas and certificates in designated fields, provided that they are issued by a local or overseas university or other similar tertiary institution, or recognised as Level 6 or above under Hong Kong’s Qualifications Framework.

The SFC also says that management experience acquired in the financial industry will be accepted to meet the requirements of an RO applicant. The five years of corporate finance experience required of ROs or executive officers (EOs) who intend to advise on matters in relation to Codes on Takeovers in a sole-capacity must be acquired “continuously and immediately preceding” the date of the application, the regulator has clarified.

The SFC says a majority of respondents supported the proposed changes to the CPT (Continuous Professional Training) requirements, which specify 10 CPT hours per calendar year as the minimum requirement for licensed representatives (LRs) and relevant individuals (ReIs), with two additional hours on regulatory compliance for ROs and EOs.

Per calendar year, individual practitioners are required to attend at least five CPT hours directly relevant to their RAs, and two CPT hours relating to ethics or compliance. Those who join the industry for the first time must complete two CPT hours on ethics within 12 months.

In light of the growing importance of ESG issues in the financial market, the SFC has adopted a suggestion to include the topic as a relevant topic for CPT purposes.

The new framework will also introduce a full exemption from obtaining recognised industry qualifications for temporary licence applicants, on the basis that such applicants already possess industry knowledge from overseas.

The consultation conclusions are available here, including marked-up texts of the revised Competence Guidelines, CPT Guidelines, and Fit and Proper Guidelines.

The new guidelines will be gazetted on 25 June and become effective on 1 January 2022.

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