Suitability in the online environment and in the offline sale of “complex products”

The Securities and Futures Commission (“SFC”) gazetted the “Guidelines on Online Distribution and Advisory Platforms” (“Guidelines”) on 6 April 2018.

The Guidelines will become effective on 6 April 2019. The SFC had on 5 May 2017 consulted on the proposed Guidelines (the “Consultation Paper”). On 28 March 2018, the SFC released its consultation conclusions (the “Consultation Conclusions”). It also issued: (a) a set of FAQs to provide further guidance to the industry (the “FAQs”), (b) a list of examples of “complex products” and “non-complex products” (the “List of Examples”), (c)
a list of specified jurisdictions, and (d) a list of examples of minimum information to be disclosed in relation to a complex product and types of warning
statements (the ‘‘Examples of Minimum Information to be provided and Warning Statements”).

Importantly, the SFC also commenced a two-month consultation on 28 March 2018 of its proposal to adopt additional measures applicable to the online sale of “complex products” to the offline sale of such products. The public is invited to submit their comments on or before 28 May 2018.

Key Questions that will be covered in the report are:

  • Do the Guidelines Apply to You?
  • When does a Platform Operator trigger the Suitability Requirement?
  • How does a Platform Operator discharge the Suitability Requirement?
  • Does your Online Platform comply with the minimum disclosure requirements in the Guidelines?
  • Does your Online Platform comply with the other requirements in the Guidelines?
  • Suitability Requirement in respect of offline sale of “complex products”?