changes now going on in banking services, including the restructuring of fees and charges, are not solely the result of interest rate deregulation. there are a number of factors – global as much as local – that are driving banks into refocusing their business. these include : increased competition from both within and outside the banking industry ; pressure to increase shareholder value ; the need to develop new income streams amid a shortage of conventional lending opportunities ; and globalisation, which is inducing banks to specialise in forms of business in which they have a competitive advantage. these various factors are forcing banks to innovate - through new products and new technologies – in order to diversify their income. they are also forcing banks to become more cost - efficient : to scrutinise the profitability of their various services, and to rationalise cost structures. the result in many cases has been substantial changes in retail banking services : for example, the selling off of business units, the closing down of branches, the expansion into fee - based business, such as mpf and insurance services, the development of more cost - effective modes of service delivery, such as the atm network and the internet, and the imposition of specific fees and charges on services that did not incur fees and charges in the past. consumers also need to react to the changing environment – for example, through making use of delivery channels such as atms, telephone banking or the internet that reduce the cost of using banking services. cost minimisation also provides the incentive for consumers to shop around, and new technology in the form of the internet enhances the means of doing so. with the shopping around comes awareness of what else is on offer, and greater expectations on the part of the consumer. less positively, there has been disruption and anxiety, which has been reflected in the steadily growing number of complaints and protests, and in the greater political attention being paid to this subject. what is the stance of the hkma? we do not, as i have already said, regulate fees and charges. but we seek to ensure that there is transparency in the provision of services, particularly in the setting out of fees and charges. the code of banking practice, which is a non - statutory code issued jointly by hkab and the dtc association with our endorsement, is the main tool for achieving this end, and, as you all know, the code is currently being subjected to extensive revision and strengthening. this process is almost at an end and we believe

, quality and efficiency in products and services, and more reasonable costs. but competition, by its very nature, produces winners and losers. it also complicates the relationship between banks and customers, as services and fee structures become more complex and more sophisticated products proliferate. the general government policy on competition in hong kong is to adopt a sector - specific approach. we are not disposed to the idea of a general, overarching competition authority, since each sector of the economy has its own special needs and concerns. the banking sector, which has its own unique history, and which, for obvious reasons, is subject to more supervision than perhaps any other sector of the economy, requires a particularly focused approach. the approach here is a simple but proactive one. the main policy objectives are to remove barriers to competition, such as the interest rate rules, and to maintain a level playing field, particularly with regard to access to infrastructure. in addition to this proactive policy approach, there are two main subsidiary concerns. one of these is to watch out for signs of collusion or anti - competitive behaviour in the industry and to address these when they occur. i should note here that we do not see such signs at present, though we remain vigilant. the other is a general concern that the adjustments to fees and services, which form a necessary part of the competition and reallocation of resources resulting from deregulation, should not lead to the exclusion of certain groups in society from a basic level of banking services, and that they should be introduced in a transparent way. again, i should make it clear that, despite the concerns expressed by a number of groups over the last few months, we believe that, in general, the banks are addressing this point. i should also add, for the avoidance of any doubt, that it is not the hkma ’ s policy to regulate fees and charges. this is something that is left to the market. it would hardly be consistent for us on the one hand to be promoting greater competition and on the other to seek to determine or influence fees and charges. however, the public concern about the effects of deregulation, coupled with the recognition of the importance of banking services to people ’ s daily lives, suggest that we should be paying more attention than we have in the past to the question of consumer issues. this is the subject to which i should now like to turn. consumer protection first, i think it needs to be understood that the