The Ministry of Finance will eliminate restrictions forbidding banks from advising their clients on investment in offshore funds, a measure welcomed by banking industry executives.
Previously the ministry requested local banks not to advertise or provide advice on offshore funds, said Tzeng Gwo-lieh (
Tzeng said that the restrictions were therefore being eliminated to prevent banks benefiting from flouting the law and to increase sector competitiveness. Nevertheless banks must still follow certain guidelines.
According to these guidelines, any advice on offshore funds provided by commercial banks should be as the result of a request by clients. The banks may not charge for such services and they are also forbidden to promote offshore funds to the general public.
The service commission that banks charge its clients at present is not an advisory fee, Tzeng said, and banks should not charge any extra fees for advisory services.
Tseng said the guidelines for providing advice will depend on the circumstances involved. No single bank should conduct an investment conference on its own; if staff from legitimate securities advisory companies participate in a conference, this would not be not considered as the bank's providing advice.
The ministry also requested that the banking industry follow rules and regulations promulgated by the Securities & Futures Commission (
Any advisory information on offshore funds by banks should be presented in written form and the clients' signature should be obtained. Clients should be made aware of any investment risks and are responsible for any losses incurred.
After the ministry announced these regulations, banking executives (信託部) suggested that the ministry establish a professional licensing system for the banking industry. The system could ensure that personnel were qualified to give advice to offshore fund investors. Some executives of bank trust departments said they had to strengthen research work on offshore funds in the future in order to be able to provide advice.
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