Consumer Council to Scrutinise MPF Fees After Employee Choice Launch

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

MPF’s Employee Choice Arrangement — “semi-portability” — was due to launch as early as November 2012. Once the market opened to competition, would fund fees really fall? Connie Lau, chief executive of the Consumer Council, said the watchdog would be watching closely: if fees stayed put despite members gaining choice, it would be treated as “highly unusual” and investigated.

Will MPF Fees Fall After the Employee Choice Launch?

The Consumer Council will monitor the MPF market closely to see whether fund fees come down; if competition fails to move fees, it will be deemed highly unusual and, if necessary, referred to the future competition authority for investigation into possible price manipulation. “Fierce rivalry is inevitable, and should in principle foster competition,” Lau said — with choice in consumers’ hands, market prices should fall as a matter of course.

Will Big Banks Use Bundled Services to Lock In Customers?

Lau rejected that fear, citing the telecoms market as proof: once telecoms services opened to competition and consumers gained free choice, prices duly fell — the normal market outcome. Some had worried that big banks or insurers would bundle services to keep clients while smaller operators, constrained by cost efficiency, could not afford to cut prices and compete — but the council expects competition to do its work.

What Counts as Anti-Competitive Behaviour?

Market share alone cannot prove a trustee is monopolising the market; establishing anti-competitive conduct requires evidence — such as operators secretly cooperating or acting in concert — before a formal investigation can proceed. Lau stressed that an anti-competition probe cannot rest on suspicion; it needs hard evidence to stand.