SFC Updates FAQs on Compliance with Suitability Obligations and Requirements for Complex Products
On 23 December 2020, the Securities and Futures Commission (the SFC) published a circular to intermediaries1 announcing updates to its frequently asked questions (FAQs) on Compliance with Suitability Obligations2 and Requirements for Complex Products.3
A summary of the key updates can be found below:
Updated Area
Purpose of the Update
Updated FAQs
Suitability Assessment
To clarify how to conduct suitability assessments.
New Question 5B (FAQs on Compliance with Suitability Obligations)
Product Explanation
To clarify the obligations of licensed or registered persons to explain product risks to clients with different degrees of financial sophistication.
New Question 6B (FAQs on Compliance with Suitability Obligations)
Distribution of Complex Products on an Unsolicited Basis
To provide guidance on complying with paragraph 5.5 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (the SFC Code of Conduct), particularly on how to perform product due diligence, disclose product information and provide warning statements for the sale of complex products on an unsolicited basis.
New Question 39 (FAQs on Complex Products)
