SFC publishes new competency framework

SFC publish new competency framework

Significant changes to Hong Kong’s competency framework will come into force at the start of next year. The framework aims to raise standards while at the same time simplifying requirements. 

The SFC’s recent consultation sought to raise the standards of competency for individuals accredited to intermediaries in Hong Kong. The conclusions of the consultation also set out the finalised text for the new Guidelines on Competence and new Guidelines on Continuous Professional Training (CPT). The conclusions were published in full on 18th June here: Consultation Conclusions on Proposed Enhancements to the Competency Framework for Intermediaries and Individual Practitioners.

Impact of the new SFC competence standards 

The new competence standards will impact individuals and corporations. For individuals, the new requirements raise the minimum levels of academic qualifications required, as well as introducing new relevant experience requirements for individuals. The changes will also clarify the minimum levels of management experience required for senior management (specifically Responsible Officers – or “ROs”).   

New higher standards are also being brought in for advisers on the Takeover Code, and those that engage in sponsor and compliance adviser work under the listing rules. The new Guidelines also set out in a lot more detail the competency assessment for corporations relevant for licensing, including minimum standards relating to internal control, operational review, risk management and compliance. 

Changes to CPT requirements 

The new CPT requirements are in some cases more stringent, now requiring 10 CPT hours per year as the minimum for Licensed Representatives and Relevant Individuals plus an extra two hours of CPT for each RO.  

At the same time, the CPT framework is being refined and simplified, for example now requiring a more straightforward system of CPT requirement per individual, as opposed to the old system of ‘per regulated activity’. ESG and Fintech are also being introduced as distinct relevant topics for CPT, along with minimum levels expected in relation to ethics and compliance.  

Planning ahead for the new regime 

The changes bring Hong Kong into better alignment with the standards of competency seen in other major financial centres. Rather than being viewed as a ‘barrier to entry’, the changes are recognised as long overdue and a positive step forward. The current competency regime had not been reviewed since its inception in 2003.  

There is some time to prepare for the implementation of change, with the effective date for the new Guidelines coming in to force as 1 January 2022. Some grandfathering provisions will be available for current licensed individuals to minimise the impact to existing practitioners and institutions of the raised academic requirements.  

Firms need to begin now to make sure they familiarise themselves with the detail of the changes as soon as possible. Planning ahead for the new CPT requirements will make the transition more straightforward and you will be well placed to make sure new entrants to the market meet the higher standards.   

We can help 

Bovill have supported firms with training and competence for 20 years. Our Hong Kong teams are experts in understanding the application of SFC regulations and helping our clients address them practically. Get in touch to find out more. 

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