May 2012 Issue No. 190
This is my first message to you as HKFI Chairman. I want to thank you for your continued support and look forward to working more closely with you in the months ahead to address many of the outstanding industry issues.
Independence of the Insurance Authority (IA)
The three self regulatory organizations (SROs), namely the Hong Kong Confederation of Insurance Brokers, the Professional Insurance Brokers Association and the HKFI together with the Insurance Agents Registration Board met the IA on 14 May to discuss this subject and share ideas. We understand that the Administration is putting together the draft enabling legislation. And I am pleased to report that the Commissioner of Insurance has kindly undertaken to consult the industry on the key legislative provisions this summer.
Commission Disclosure under the Prevention of Bribery Ordinance To review the respective legal opinions received by the three SROs and develop a solution acceptable to all parties involved, we will join forces to study the issue in question. We expect to complete the review within three months and be able to come up with a set of agreed action items so as to facilitate further discussion with the IA.
Mandatory Provident Fund Schemes (MPF)
The Hong Kong Investment Funds Association, Hong Kong Trustees’ Association and the HKFI have set up a Joint Industry Group (JIG) and commissioned an independent study to review where MPF stands relative to defined contribution pension systems in other jurisdictions in terms of fund options, fund performance and fees. It also provides an opportunity to see how the MPF system may be improved based on what we learn from more mature systems globally. A briefing was held on 22 May to advise Life Insurance Members of the findings, which was followed by a media conference on 24 May to publicly release the consultancy report entitled, “The Evolving MPF system: an Objective Assessment”. The study, conducted by Ernst & Young, compares Hong Kong’s MPF to its counterpart in Australia, Chile, Singapore and the United Kingdom. The findings showed that: • Hong Kong’s MPF has progressed very well through the first decade of development supported by a robust infrastructure; • Investment performance compared well to the above jurisdictions over one-year and five-year periods. • Fund management fees compare favourably with those charged in the above systems. Total fees are also in line with other jurisdictions at a similar stage of development. • With a change of Chief Executive and a greater awareness of the issues that will emerge from an ageing population, this is an opportune time to map out a path forward. • Lack of incentive for investment advice impacts members’ retirement benefits. All in all, without the MPF System, Hong Kong would be ill prepared to consider the issues that will arise from a rapidly ageing population. The JIG hopes to see more debate as to how to make the current MPF system even better to ensure people of Hong Kong can enjoy a well earned retirement.