HONG KONG: The Consumer Council has warned the public about risks in London gold margin trading and medical insurance plans.

The government watchdog received five complaints on sales misconduct in local London gold margin trading in the first 10 months of the year.

Complainants said they received unsolicited calls from an agent asking about their investment goals or experience, and were persuaded to open a discretionary account with oral promises of "returns guaranteed". However, they found their investment shrank to a total loss within a short period of time.

This was because some agents were allegedly engaged in active buying or selling more than 30 times in a single day, breaching the trading frequency limit no more than twice per day the complainants asserted.

The council warned that as London gold is traded on a bilateral basis in the over-the-counter market, it is not subject to specific regulation.

Unwary investors are also extremely vulnerable to investment firms that are not registered members of the Chinese Gold & Silver Exchange Society - the self-regulatory body in the trade.

The Consumer Council also issued warnings about traps in medical insurance plans.

The council said medical insurance policies are as varied as they are complex, and consumers are urged to pay attention to the provisions and exclusions in small print which are equally important, if not more, in addition to the premium and scope of cover in the choice of an insurance plan.

The warning followed a Consumer Council survey of 39 hospital and surgical medical insurance plans by 10 major insurance companies.

The council said some policies contained a "waiting period" provision, which means that no indemnity will be paid for medical expenses incurred for any sicknesses within 15 to 30 days after the commencement of the policies, or for medical expenses incurred due to specified illnesses, such as diseased tonsils requiring surgery, haemorrhoids, or cataracts for up to one year.

Some insurance companies have replied that they have the absolute discretion over whether a hospital visit is medically necessary.

China Daily

(HK Edition 12/16/2009 page4)