Employee Choice Launches: Insurers Eager, Banks Passive

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

The Employee Choice Arrangement took effect, giving employees the right to move their own contributions. A hotline test of six trustees: insurers — Sun Life, AIA, Manulife — were proactive, dispatching frontline agents immediately. Banks were generally passive, with staff merely outlining plans and transfer methods.

Why were banks so passive?

They’d done the cost-benefit maths. Take Bank of China (Hong Kong) (02388) with nearly 100 branches: MPF runs on a referral model — “Easy Plan” queries go to Bank Consortium Trust; the cheaper “My MPF Plan” needs a different hotline, though 80-plus branches accept forms. BCT chief executive Chan Yue-chang said 1.73% average fees across 500-plus funds wasn’t high, and with the world’s strictest sales regulation, banks inevitably eased off.

What about HSBC?

Only 40-odd branches could help. The leader’s hotline staff said plainly: just over 40 branches handled MPF business; finding one needed another call. Like BOC, the cheapest product sat apart from the main service.

What is the lesson from 2012?

On 1 November 2012, insurers and banks started from different blocks. Insurers deployed agent armies, one by one; banks leaned on branch networks that didn’t quite reach. Years on: semi-portability rewarded whoever showed up ready — insurer or bank, you have to play to win.