, published a new vision and strategy document ( vision 2010 ) for the nps in april this year. the purpose of this document was to provide high - level strategic guidance for the payment system up to 2010. finally, there appears to be a general misunderstanding that the bank has a " hands off " approach to the oversight and regulation of the nps. i would remind all nps stakeholders that section 10 ( i ) ( c ) of the south african reserve bank act states clearly that the bank, " perform such functions, implement such rules and procedures and, in general take such steps as may be necessary to establish, conduct, monitor, regulate and supervise payment, clearing or settlement systems ”. furthermore, as i noted earlier, the 2004 amendment to the nps act makes provision for the bank to issue directives pertaining to the nps. we raise this issue as the bank will soon be issuing directives in terms of the nps act which will regulate non - bank participants in the nps for the first time. we have noticed that the number of nonbank participants has increased to the extent that the risk associated with their operations and the risk that they bring to the clearing and settlement environment requires some formalisation. of particular relevance in this regard are system operators and third party service providers, who mostly operate in or on behalf of the retail sector. we want to make it clear, particularly to the banking sector, that strict regulation will be applied as far as the nps is concerned. this should not be perceived negatively, nor do we wish to stifle innovation or competition in the industry. however we need to apply strict supervision and regulation to both bank and non - bank participants in the critical area of the nps and avoid the risk of turbulence that may emanate from a hands - off approach to regulation. this may require some adjustment to current structures in the nps and the bank will have to start playing a far more prominent role in areas such as supervision, regulation and licensing of participants. we also need to ensure that these newly regulated entities have channels to engage with the bank and other stakeholders, including pasa, in a fair and transparent way. the bank has already initiated discussions with various international central banks and consulted with nps stakeholders with a view to adopting a model which will facilitate such engagement. this may take some time but i can assure you that the bank will continue with the collaborative approach it has used for nps matters in the past before making any final decisions in

norman t l chan : hkma and the protection of bank customers speech by mr norman t l chan, chief executive of the hong kong monetary authority, at the kpmg luncheon talk, hong kong, 11 july 2013. * * * ayesha ( macpherson lau ), distinguished guests, ladies and gentlemen, first of all, let me thank ayesha and kpmg for inviting me to this luncheon talk. when i took up the post of the chief executive of the hkma in 2009, we were faced with the aftermath of the lehman brothers saga. as most of you would remember, there was immense public pressure on enhancing the protection of consumers and investors. my colleagues in the hkma and i have regarded this as one of our priority areas and we have put our hearts and souls into strengthening our regime on banking conduct supervision in the past few years. in 2010, i set up two new departments, namely the banking conduct department and the enforcement department, within the hkma. these are important milestones in the development of the hkma, and we have indeed turned a new page in protecting bank customers, be they consumers or investors. i would like to take the opportunity of today ’ s luncheon talk to share my thoughts on this. why should we provide protection to bank customers? first, let me pose a question “ why should we provide protection to bank customers? ” the answer is quite simple. in modern times, most societies would demand proper protection of consumers when they purchase a wide variety of goods and services, such as food, electrical appliances, drugs, health care and financial services. consumers, as compared to suppliers and their intermediaries, are normally in a disadvantaged position in terms of product knowledge and bargaining power. therefore, they need to be protected from unscrupulous sales practices or misrepresentations. regardless of what kinds of goods or services are involved, the basic principle in consumer protection is that consumers should be treated fairly. in essence, what it means is that consumers should be able to know what they are buying, the costs involved and all other relevant terms and features of the transactions and should not be subject to high handed sales tactics. in hong kong, when a customer walks into a typical retail bank, he or she can undertake a wide variety of financial transactions, ranging from conventional banking services, such as deposits, currency conversion, credit cards, remittances and loans, to the purchase of wealth management or insurance products.