Follow-up of Complaints about Octave Notes

There are 270 investors in Macao who bought Octave Notes with an investment of MOP 119 million in total, of which, MOP 1.07 million and 17.76 million came from the affected series 21 and 22 respectively. Up to 26 July 2010, Monetary Authority of Macao (AMCM) has received 27 complaints, involving a total investment amount of MOP 15.78 million for the affected series 21 and 22. After receiving the complaints about Octave Notes, AMCM has, pursuant to current policies and guidelines on handling complaints (http://www.amcm.gov.mo/pledge/Pledge.htm), requested the distributing banks to follow up, respond to complainants and submit to AMCM investigation reports with their findings and other relevant information. At the same time, apart from its own follow-up and investigation, AMCM maintains close contact with overseas regulators handling similar cases, exchanges views on handling process and progress. In addition, meetings with the distributing banks have been held and the banks have been requested to follow up the cases seriously. In the recent meeting held on 19 July 2010, the distributing banks indicated that they would speed up the process with reference to the way adopted by the banks concerned in neighbouring regions. AMCM established in 2004 supervisory requirements for selling of financial investment products by financial institutions, which call for clear disclosure of the particulars, features and inherent risks of the products, understanding of customers’ financial status, investment experience and purpose of investment to ensure that the investors have adequate knowledge in assessing risks and returns of the products, setting up effective internal control and risk management systems, and taking measures to ensure that the front-line sales staff have adequate experience, capability and qualification. In view of the Lehman Brothers incident, AMCM has drafted the “Guideline on the Provision and Distribution of Financial Products” which is to be promulgated soon for implementation as the necessary consultation is just closed. The distributing banks have reviewed their sales policies, procedures and the practical implementation, and enhanced the measures for the follow-up of the complaints lodged. Such measures include setting up of a task force to deal with complaints about Octave Notes, customer hotlines, close contact with customers to update progress, interview groups to receive and assist customers, as well as to maintain liaison with the issuing entity to obtain the latest information. AMCM will continue to process complaints in accordance with the “Guideline on Handling of Customer Complaints”, maintain contact with all parties concerned, in particular, the distributing banks with a view to urging them to resolve the cases at an earlier date. In the course of investigation, should violation of supervisory requirements be uncovered, AMCM would take punitive measures pursuant to provisions of the Financial System Act approved by Decree-Law no. 32/93/M of 5 July.