HSBC beefed up MPF staffing ahead of semi-free choice: fees could fall

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

Era context: The original was brief, recording market leader HSBC Insurance’s pre-launch posture. With a switching wave expected, big trustees were hiring to handle workloads while signalling “room for fees to fall” — the scheme’s biggest policy hope: competition pushing fees down.

An MPFA survey suggested 10% of contributors would switch trustees once the November MPF “semi-free choice” scheme launched. How was market leader HSBC Insurance preparing?

How did HSBC prepare for semi-free choice?

HSBC Insurance’s Asia-Pacific head and employee benefits chief told media he was confident the bank would keep its number-one market share. Preparations included launching low-fee funds the previous year, cutting fees on selected funds, stationing MPF specialists at 26 branches (with more to follow), and assigning staff to handle contributor hotlines and client contact.

He said the bank stood ready to hire more people — if 10% of contributors switched, workloads for its MPF team would rise by about 20%. A review of its MPF offering was also planned within two months.

Would MPF fees come down?

He believed MPF fees had room to fall, especially as trustees might cut prices to win clients when the scheme launched. But he cautioned that operating costs would rise in the short term, intensifying competition.

In hindsight, that 2012 remark — “room to fall” — captured the scheme’s biggest policy hope: using competition to push fees down.