Legislating MPF Intermediary Regulation: The Protection Upgrade Behind the Semi-Portability Delay
2011-05-14
In September the MPFA announced that to better protect over two million employees, it proposes reinforcing the MPF intermediary regime through legislation — and the government agrees. The price: the Employee Choice Arrangement (semi-portability) slated for April 2011 is postponed while the MPFA pursues other measures to help employees choose trustees and boost competition.
The regulatory landscape: how many intermediaries?
| Item | Figure (end-Sept 2010) |
|---|---|
| MPF intermediaries | 28,352 |
| Corporate intermediaries | 477 |
| Individual intermediaries | The rest (mainly banking, securities, insurance) |
| Assets under management | Over HK$300 billion (built over 10 years) |
What will legislation fix?
Current intermediary oversight is merely administrative — toothless. After legislation, unlicensed selling becomes an offence, and regulators gain inspection, investigation and disciplinary powers: real protection for two million-plus employees.
Is the delay a cost or an investment?
Postponed semi-portability looks like lost choice in the short term; but long term, choice without regulation only breeds more Lehman-style tragedies. Trading a year for regulation with teeth is arithmetic that works.
Protection and choice shouldn’t be either-or. Legislation aims for both. Compare MPF funds’ fees and returns at MPF fund comparison.
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