Hang Seng Bank fined HK$66.4m for overcharging, sales misconduct

It reportedly received HK$22.4m in excess benefits and fees, the HKMA and SFC said.

Hang Seng Bank (HSB) is fined HK$66.4m for reportedly overcharging clients, making inadequate disclosure of monetary benefits, and misconduct in selling practices of investment products.

The Hong Kong-headquartered bank received at least HK$22.4m in excess benefits or fees from transactions made between November 2014 and May 2023 as a result of overcharging, based on a joint investigation by the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC).

Separately, the HKMA and SFC found concerns on HSB’s sale of collective investment schemes (CIS) products from 1 June 2016 to 30 November 2017, according to a joint statement published on 27 January 2025.

Fourty-six (46) of the bank’s clients who executed 100 or more CIS transactions during the period were said to have been influenced by their relationship managers’ solicitation or recommendation in their trades.

“They were solicited into conducting excessively frequent transactions with short holding periods, a trading pattern which contradicted both the funds’ investment objectives and the clients’ preferred investment horizons,” the HKMA and SFC said.

The frequent trades in CIS products reportedly resulted in significant transaction costs borne by the clients, the HKMA said.

HSB also reportedly led 148 transactions involving products whose risk level is higher than the clients’ risk tolerance level between 17 February 2014 and 19 December 2018.

During the same period, 399 clients— who were not characterised as having knowledge of the nature and risks of derivatives— purchased derivative funds in 629 transactions.

The SFC and HKMA also found that HSB overcharged clients and was inadequate in its disclosure of monetary benefits.

The bank is said to have retained monetary benefits from client transactions in circumstances where it should not have done so under applicable regulatory standards, the HKMA said.

It is also said to have charged its clients transaction fees beyond amounts previously communicated to them.

The bank also failed to adequately disclose trailer fee arrangements to clients trading in investment funds, according to the HKMA and SFC’s investigation.

These issues were first brought to the SFC’s attention by self-reports from HSB or referrals of findings from the HKMA.  

HSB has reportedly compensated impacted clients and has taken remediation steps and enhancement measures to rectify and strengthen its internal controls.