Before the Employee Choice Arrangement: regulators eyed two tough curbs on selling

This article is a rewrite of a report from July 2012.

With the Employee Choice Arrangement just over three months away, trustees were gearing up to fight over HK$200 billion in switchable business. Meanwhile regulators were negotiating future sales guidelines with intermediaries, leaning toward two tough curbs on insurers and banks.

What were the two curbs?

Curb one: banks must sell inside the “red zone” — risk-profiling members plus recorded calls, a laborious hour-long process. Curb two: insurance intermediaries must record sales, and frontline staff would be barred from giving investment advice — such as whether to switch from low-risk to high-risk funds — altogether.

How did the industry push back?

By calling it unworkable. The life-insurance practitioners’ association chairman said draft guidelines would require detailed assessments before fund selection, with recordings and signed documents if clients insisted on unsuitable products — yet agents typically met clients in cafes and cha chaan tengs, where recording MPF pitches was “simply unworkable”. On the advice ban, he said selling MPF inevitably touched on advice; to avoid crossing lines, agents would just list each fund’s risks and let clients decide.

When would it be final?

August at the earliest, otherwise September. The MPFA declined to comment on the rumours, saying only that the intermediary conduct code was being revised. Separately, new intermediary registrations would pause from mid-September to end-October while online systems were upgraded.