Why do new MPF fund types take so long? Approvals can drag past two years

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

(Editor’s note: isolated characters were missing in the original and have been conservatively restored from context.) With “semi-free choice” nearing its November 2012 launch, the industry saw a battleground. Beyond price cuts, the secret weapon was new funds to lure switchers — but each new MPF fund type had to clear approval first, and that could be painfully slow.

How slow were approvals?

Even passive index funds waited over two years. Products seen as relatively low-risk — index-tracking, passively managed — routinely took more than two years to clear. At an 10 August 2012 meeting with MPFA management, trustees reported approvals took at least 6 to 12 months, missing launch windows, and pressed for faster processing.

How did the MPFA respond?

The authority pledged a service commitment: once complete application documents were received and verified against legal and approval criteria, it would finish within three months. But it stressed incomplete submissions from trustees would delay processing.

Who waited the longest?

BOC-Prudential was the case in point: the SFC’s website showed three newly approved index funds — a CSI Hong Kong 100 index fund, a European index tracker and a North American index tracker. The chief executive of fourth-ranked BOC-Prudential admitted applications had gone in more than two years earlier.

“Semi-free choice” was a battleground and new funds the secret weapon — but slow weapons might miss the battle.