HONG KONG - HONG Kong has launched a full review of its financial regulation structure after thousands of investors suffered heavy losses after buying products backed by collapsed US bank Lehman Brothers.

Hong Kong's Financial Secretary said the review will firstly aim to better protect retail investors by examining the sale of financial products and whether enough information about them is currently disclosed.

'Later we will carry out a structural review that may be required for improving the regulatory structure and protecting investors as well as other measures that need to be implemented through legislation,' Mr Tsang said late on Thursday.

The move followed the publication of reports by Hong Kong's two regulatory bodies - the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) - into the scandal.

The two have been the target of fierce criticism, after thousands of investors including some retirees, said they were missold the complex products that have seen their value plummet since Lehman's collapsed in September.

In the two reports, parts of which were not released for legal reasons, the regulators agreed there should be a clear distinction between banking services and securities services.

There has been suggestions the two bodies should be merged following the episode.

But SFC head Martin Wheatley on Wednesday said such a move would be very complicated and insisted the city's regulatory system had stood up to the global financial crisis.

More than 40,000 Hong Kong investors put a total of HK$15.7 billion (S$2.9 billion) of their savings into minibonds and other complex products backed by Lehman.

The subsequent loss in their value sparked protests across the city. -- AFP