Hong Kong Tightens MPF Intermediary Rules Ahead of Semi-Portability

To pave the way for MPF “semi-portability”, the government will table proposals next month to strengthen regulation of MPF intermediaries. If LegCo agrees, detailed legislation follows. It is a key step before the employee choice arrangement lands: regulate first, liberalise after — with the latest average MPF fund fees comparison putting charges at 1.6%.

What is proposed?

Keep the “one industry, four regulators” model, with the MPFA coordinating and 29,000 existing intermediaries given two years to transition. The MPFA says the current split — HKMA, SFC and Insurance Authority licensing intermediaries, MPFA coordinating — can continue. Permanent Secretary for Financial Services and the Treasury Au King-chi said one firm under one regulator works better, and keeping the model helps deliver semi-portability sooner without swelling MPFA headcount.

Where do MPF fees stand now?

Average charges have fallen to 1.6%, with room to fall further. After pressing trustees to cut fees, the MPFA says the latest average scheme charge is down to 1.6% — still with room to fall, but for the industry to decide. Once semi-portability lets employees vote with their feet, fee competition will intensify — which is exactly why the rules must come before the liberalisation: fiercer competition needs stronger mis-selling defences.

How should workers prepare?

Semi-portability is not here yet, but it is time to start comparing. Legislation and the regulatory framework still need time, but the direction is set. Workers can use the interval to study trustees’ fees and fund performance, so they are ready — not rushed — when the employee choice arrangement takes effect.

To compare charges and returns across MPF funds, visit MPF fund comparison.