A process review panel has advised the Securities & Futures Commission to step up supervision of intermediaries and introduce measures to monitor those which have deficiencies in their internal control system.

In its annual report published today the Process Review Panel for the Securities & Futures Commission said it reviewed 55 completed or discontinued cases of the commission covering various areas.

Panel chairman Anthony Chow said, in general, the commission has been adhering to its established internal procedures in its decisions and actions.

"The panel has also identified certain areas where there could be room for improvement, and made recommendations and observations to the commission accordingly," he added.

Recommendation list

The panel advised the commission to:

* put in place a monitoring system to expedite the processing of licence applications;

* keep applicants and their employers informed about the progress of licence applications;

* expedite the conclusion of inspections by engaging additional accounting firms, or agreeing with the appointed firm a pre-set timeframe to conduct a circularisation exercise;

* strengthen education for investors on the importance of understanding a product for making an informed investment decision;

* clarify the process in deciding whether and how an enforcement case should be taken forward;

* put in place measures to monitor intermediaries identified to have deficiencies in their internal control system so an inspection would be carried out at an appropriate time or the recommendations made by audit firms would be followed up properly; and,

* step up supervision of intermediaries to prevent broker misconduct.

Welcoming the report Financial Secretary John Tsang said the panel's recommendations are constructive and can help the commission improve the efficiency, fairness and transparency of its procedures. They will also help foster a compliance culture in the industry.