HKSI Paper 1 Business operations and practices question: Handling a client complaint

HKSI Paper 1Business operations and practices

Mrs Cheung complains in writing that her account executive, Mr Ng, placed trades without her instructions. Mr Ng's team head offers to investigate personally because he supervises Mr Ng. Under the Internal Control Guidelines, how should the firm handle the complaint?

A By the team head, because the person who supervises the account executive is best placed to judge his conduct
B By passing it straight to the SFC, because a licensed corporation may not investigate complaints about its own staff
C Under written procedures, with the investigation done where possible by compliance staff not directly involved in the matter
D By asking Mr Ng to settle it directly with Mrs Cheung, recording it only if she escalates to the Financial Dispute Resolution Centre

Show the answer and explanation

Answer: C. Under written procedures, with the investigation done where possible by compliance staff not directly involved in the matter

Part V (Compliance) of the Internal Control Guidelines requires policies and procedures for the proper handling of client complaints, with prompt remedial action. The complaints procedures should be in writing and, where possible, complaints should be investigated by staff performing the compliance function who are not directly involved in the subject matter. The team head supervises Mr Ng and is directly involved. Firms are expected to investigate complaints themselves, not simply pass them to the SFC. Leaving the account executive to settle it privately defeats the control. Source: SFC Internal Control Guidelines (April 2003), Part V para 5 (as at October 2026).

Common mistake

Letting the line supervisor investigate. Independence from the subject matter is the point of the control.

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Original study material mapped to the public HKSI Paper 1 syllabus. Unofficial, not endorsed by HKSI Institute or the SFC. Verify figures and rules against current guidance before relying on them.