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MPFA welcomes passage of bill on the regulation of MPF intermediaries
The Mandatory Provident Fund Schemes Authority (MPFA) welcomed the passage of the Mandatory Provident Fund Schemes (Amendment) (No. 2) Bill 2011 by the Legislative Council today (21 June).
With the passage of the Bill, a statutory regulatory regime for MPF intermediaries will be set up, and both the statutory regime and the Employee Choice Arrangement (ECA) will come into effect on 1 November 2012.
ECA will let 2.3 million employees have a bigger say on their MPF savings by allowing them to transfer once per calendar year (that is, from 1 January to 31 December in any given year) the accrued benefits derived from their own mandatory contributions made during current employment to a trustee and scheme of their choice.
Upon implementation of ECA, the size of transferable MPF assets is estimated to increase from around 41% to more than 67% of total MPF assets.
The establishment of the statutory regime for MPF intermediaries will enhance the regulation of sales and marketing activities of MPF schemes, which is expected to become more intensive after the launch of ECA, thereby further strengthening protection of scheme members' interests.
A spokesman for the MPFA said, "The MPFA has been working closely with MPF trustees to ensure a smooth implementation of ECA. With the passage of the Bill, we will now undertake the final round of preparatory work, which includes conducting training sessions for MPF intermediaries and carrying out territory-wide publicity and education campaigns to raise public awareness of the new arrangement."
Under the new regulatory regime, the MPFA will be the sole authority to register MPF intermediaries and to issue guidelines on compliance with statutory conduct requirements. It will also handle complaints on MPF sales and marketing activities. In misconduct cases, the MPFA will be the sole authority to impose disciplinary sanctions.
The Hong Kong Monetary Authority, the Insurance Authority and the Securities and Futures Commission will be given the statutory role as frontline regulators responsible for the supervision and investigation of registered MPF intermediaries whose core business is in banking, insurance and securities respectively.
After the Bill comes into effect on 1 November, subject to certain specific exceptions in the legislation, it will be an offence for anyone who is not a registered MPF intermediary to engage in the sale or marketing of MPF schemes.
Furthermore, intermediaries will be required to follow prescribed conduct requirements, which include, amongst others, acting honestly, fairly and in the best interest of their clients, disclosing sufficient information to their clients and making their best endeavours to avoid a conflict of interest. The intermediaries will be subject to disciplinary sanctions for non-compliance with the conduct requirements. The sanctions that may be imposed include reprimand, fines, and revocation or suspension of registration.
A two-year transitional period will be provided such that all MPF intermediaries registered with the MPFA (30,406 as at 31 May 2012) before 1 November 2012 will be transferred automatically to the new regime. They will be allowed to carry on MPF intermediary activities during the transitional period before they obtain new registration with the MPFA under the regulatory regime.
Separately, as the MPFA expects the volume of transfers of accrued benefits after the implementation of ECA may rise significantly, an electronic Portability Automation Services System, or ePASS, has been developed to automate the transmission of data on the transfer of accrued benefits between trustees. The Bill empowers the MPFA to mandate the use of this electronic platform among trustees and provides for associated matters.
In addition, in a continued effort to combat cases of contribution defaults, the Bill also creates a new offence for failure by an employer to comply with a court order for the payment of arrears of MPF mandatory contributions and surcharges. It also provides for a daily penalty for employers who continue to fail to make MPF mandatory contributions for their employees.
- Ends -
21 June 2012
With the passage of the Bill, a statutory regulatory regime for MPF intermediaries will be set up, and both the statutory regime and the Employee Choice Arrangement (ECA) will come into effect on 1 November 2012.
ECA will let 2.3 million employees have a bigger say on their MPF savings by allowing them to transfer once per calendar year (that is, from 1 January to 31 December in any given year) the accrued benefits derived from their own mandatory contributions made during current employment to a trustee and scheme of their choice.
Upon implementation of ECA, the size of transferable MPF assets is estimated to increase from around 41% to more than 67% of total MPF assets.
The establishment of the statutory regime for MPF intermediaries will enhance the regulation of sales and marketing activities of MPF schemes, which is expected to become more intensive after the launch of ECA, thereby further strengthening protection of scheme members' interests.
A spokesman for the MPFA said, "The MPFA has been working closely with MPF trustees to ensure a smooth implementation of ECA. With the passage of the Bill, we will now undertake the final round of preparatory work, which includes conducting training sessions for MPF intermediaries and carrying out territory-wide publicity and education campaigns to raise public awareness of the new arrangement."
Under the new regulatory regime, the MPFA will be the sole authority to register MPF intermediaries and to issue guidelines on compliance with statutory conduct requirements. It will also handle complaints on MPF sales and marketing activities. In misconduct cases, the MPFA will be the sole authority to impose disciplinary sanctions.
The Hong Kong Monetary Authority, the Insurance Authority and the Securities and Futures Commission will be given the statutory role as frontline regulators responsible for the supervision and investigation of registered MPF intermediaries whose core business is in banking, insurance and securities respectively.
After the Bill comes into effect on 1 November, subject to certain specific exceptions in the legislation, it will be an offence for anyone who is not a registered MPF intermediary to engage in the sale or marketing of MPF schemes.
Furthermore, intermediaries will be required to follow prescribed conduct requirements, which include, amongst others, acting honestly, fairly and in the best interest of their clients, disclosing sufficient information to their clients and making their best endeavours to avoid a conflict of interest. The intermediaries will be subject to disciplinary sanctions for non-compliance with the conduct requirements. The sanctions that may be imposed include reprimand, fines, and revocation or suspension of registration.
A two-year transitional period will be provided such that all MPF intermediaries registered with the MPFA (30,406 as at 31 May 2012) before 1 November 2012 will be transferred automatically to the new regime. They will be allowed to carry on MPF intermediary activities during the transitional period before they obtain new registration with the MPFA under the regulatory regime.
Separately, as the MPFA expects the volume of transfers of accrued benefits after the implementation of ECA may rise significantly, an electronic Portability Automation Services System, or ePASS, has been developed to automate the transmission of data on the transfer of accrued benefits between trustees. The Bill empowers the MPFA to mandate the use of this electronic platform among trustees and provides for associated matters.
In addition, in a continued effort to combat cases of contribution defaults, the Bill also creates a new offence for failure by an employer to comply with a court order for the payment of arrears of MPF mandatory contributions and surcharges. It also provides for a daily penalty for employers who continue to fail to make MPF mandatory contributions for their employees.
- Ends -
21 June 2012
