Better deposit protection proposed

An amendment bill to enhance the Deposit Protection Scheme (DPS) by raising the protection limit from the current $500,000 to $800,000 was published in the Government Gazette today.

The Deposit Protection Scheme (Amendment) Bill 2024 also aims to strengthen the protection for depositors, maintain banking stability and keep up with international standards and the latest developments of Hong Kong.

Secretary for Financial Services & the Treasury Christopher Hui noted that Hong Kong has a robust and resilient banking sector.

Apart from pointing out that the latest review has shown that the overall design and key aspects of the scheme remain appropriate, he said proposed enhancements seek to fulfil international standards and ensure the effectiveness of the scheme in maintaining banking stability.

Other enhancements to the scheme include refining the levy system to enable the DPS Fund underpinning the scheme to reach the target fund size within a reasonable timeframe under the increased protection limit.

The Government also proposes to provide enhanced coverage to affected depositors upon a bank merger or acquisition.

Additionally, the bill proposes requiring the display of the DPS membership sign on the electronic banking platforms of DPS members and streamlining the negative disclosure requirement on non-protected deposit transactions for private banking customers.

The scheme was launched in 2006 to provide protection for depositors and contribute to banking stability.

After initiating a comprehensive review of the scheme in 2021, the Hong Kong Deposit Protection Board conducted a three-month public consultation last year and commissioned a public opinion survey on the proposed enhancement measures.

The bill will be introduced into the Legislative Council for first reading on May 8.