Hong Kong: Are your privacy terms worth the paper they are written on?

Last Updated: 14 November 2010
Article by Urszula McCormack

The latest developments in Hong Kong's personal data regulation could have significant impacts for the consumer banking and finance industry. This alert identifies ten practical ways that financial institutions can strengthen their privacy terms now.

Background: Recent strides by Hong Kong's privacy regulator

In October 2010, the Hong Kong Privacy Commissioner for Personal Data (PCPD) issued a report on its investigation into the Octopus data sharing scandal (Report) and a new guideline on the collection and use of personal data in direct marketing (Guideline). This closely follows the PCPD's enforcement action against Wing Lung Bank Limited for a breach of Hong Kong's disclosure restrictions, which was upheld by the Administrative Appeals Board in August 2010 (Wing Lung Bank Case).

These developments are fortifying the rules on privacy, even before the Hong Kong Government's current consultation process on the Personal Data (Privacy) Ordinance has finished. In many cases, they are providing a much narrower interpretation of the rules than previously expected.

Privacy issues are also receiving substantial media and regulatory attention. Several SFC and HKMA circulars have been issued (including one on 28 October 2010 by the SFC) publicising the recent developments. Bad publicity is especially problematic for the consumer banking and finance industry, which relies on relationships with individuals, and the perception of fair treatment, transparency, good governance and security.

10 practical ways to strengthen your privacy terms

The following summarises some key messages from the Report, Guideline and Wing Lung Bank Case for financial institutions operating in Hong Kong.

1. Use a distinct privacy statement

Privacy terms should be in a conspicuous, stand-alone privacy statement. They should not be hidden within the main body of customer terms, buried in fine print or designed in a way that discourages customers from reading them.

The privacy statement should be easy to read. Layout is important - visual tools such as bold headings, short paragraphs and spacing should be used. The Privacy Commissioner's privacy policy provides a good example.

2. Address your customers' expectations

Greater care is required when dealing with individuals than companies. This means taking a conservative approach to personal data management, by:

  • considering what a reasonable person in your customers' position might expect about how their personal data could be used;
  • taking particular care to explain any other ways you want to use that data; and
  • giving customers a genuine opportunity to protect their constitutional and statutory rights to privacy.

For example, the Guidelines recognise that a bank may use customers' personal data for marketing financial and insurance products. Marketing other types of products must be explained clearly.

3. Distinguish mandatory and voluntary information

The collection of data cannot be excessive. Customers must be informed that it is voluntary to provide any data that is not strictly required for a particular service.

For example, the Code of Banking Practice prohibits banks from refusing basic banking services if the customer does not agree to the use of that information for marketing services.

Banks should therefore:

  • explain to customers what information is mandatory for basic banking services (and other types of relevant services) and what is voluntary;
  • use a simple method to distinguish the different types of information (for example, mandatory information can be identified in the form of asterisks on the application form); and
  • consider whether less sensitive information could be used for a particular purpose.

Similar principles apply to other financial institutions.

Of course, financial institutions have greater know-your-customer requirements than other companies, and therefore a broader mandate to collect personal data. However, restraint is still required. For example, onward disclosure must be controlled - usually, only a customer's name and telephone number should be transferred for cross-marketing purposes.

4. Be specific

Be as specific as possible about:

  • how you need to use customers' personal data to conduct your business; and
  • who you need to disclose it to.

Customers need a "reasonable degree of certainty" about how their personal data may be used and the classes of persons to whom it could be transferred. Specificity is also a requirement under the Code of Banking Practice.

Each class must be defined by its distinctive features. For example:

Acceptable description

Insufficient description

"financial services companies"

"selected companies"

"telecommunications provider"

"any person under a duty of confidentiality to us"

The possibility of customers being approached by other businesses needs special attention. Similarly, financial institutions should expect that transferring personal data to foreign tax authorities is particularly sensitive and must be described explicitly.

5. Use 'catch-all' provisions with caution

If you envisage a particular type of disclosure, say it.

Loose terms such as "other persons considered appropriate from time to time" and "other related purposes" are interpreted narrowly and are disliked by the regulators. Even if 'catch-all' provisions are drafted well, they are difficult to rely on for reputational reasons.

6. Provide options

The law does not require taking an "opt-in" approach - where customers signal their positive consent to a particular type of disclosure (for example, by ticking a box). Instead, customers have a statutory right to withdraw consent from certain uses of their information and must be given an opportunity to "opt-out" of direct marketing.

However, providing options to customers offers strong evidence that they are aware of particular types of disclosure. This is essential to enforcing broad or unusual privacy terms.

For example, the Guidelines say that customers should have a "practicable" opportunity to refuse the disclosure of personal data for direct marketing purposes that are unrelated to the services they would expect to receive from you. A "bundled consent" approach (where customers either agree to, or refuse, all the privacy terms) does not satisfy this requirement.

7. Check the font size

Privacy terms should be printed in a size that is "easy and clear to read" for a person with normal eyesight. Fine print is unlikely to be enforceable, even if the terms are technically perfect.

Font size also ties into other visual factors such as layout, colour and style. These factors would be familiar to financial institutions - for example, the SFC Code of Conduct contains several provisions relating to the prominence of disclosure.

8. Use plain language

If it cannot be said simply, assume your customers will not understand it.

The privacy statement should:

  • use simple language that a reasonable person in your customers' position can understand;
  • contain short sentences, rather than convoluted phrases;
  • use meaningful headings (such as "Purposes for collecting your data");
  • keep legal and technical terms to a minimum; and
  • be easy to navigate and quick to read.

Words will be given their ordinary meaning and, in the case of uncertainty, they will usually be interpreted in your customers' favour.

Plain language is gradually being adopted by the Hong Kong financial industry in consumer terms and conditions. This is primarily being driven by product disclosure standards and requirements imposed by other jurisdictions in which financial institutions operate. It is already required by the Code of Banking Practice.

9. Avoid cross-referencing

The privacy statement should be self-contained. Cross-referencing and defined terms should be kept to a minimum.

10. Keep a paper trail

Time is of the essence for a privacy statement. This is because a type of use that is not disclosed at the time of collecting a customer's personal data will normally require their (signed) express written consent.

Many financial institutions require customers to expressly acknowledge and agree to the privacy statement on the customer application form (which the customer signs). This is helpful. To complete the paper trail, all documents provided to a customer should be logged. In particular, records should show:

  • the documents provided to the customer;
  • which version was used; and
  • when the documents were provided.

Opt-out lists must also be kept up-to-date and communicated to relevant parties.

It's important to start implementing now

It is possible that the Octopus and Wing Lung Bank cases will be appealed. However, the latest consultation document on the Personal Data (Privacy) Ordinance was issued on the same day as the Report and echoes many of the same points. Public sentiment on privacy issues has also intensified.

The Privacy Commissioner is currently investigating four banks. As is evident from the Report, the Privacy Commissioner's powers are limited. Penalties can only be imposed if an enforcement notice issued by the Privacy Commissioner is not followed. This means that taking proactive steps now to conform to the new standards can have a material impact on the way that past behaviour is treated.

The latest consultation closes on 31 December 2010

We recommend that our clients:

  • prepare an implementation plan to ensure that relevant policies and procedures are updated; and
  • preview their privacy terms, cross-marketing contracts and outsourcing arrangements as soon as possible.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.