As reported earlier this week, advisers selling ILAS products in Hong Kong will, from 1 July, have to formerly disclose the amount of commission they are due to receive on each sale to the client in a newly created Important Facts Document. This disclosure must also be followed by a call from the life company providing the scheme to check, among other things, that the adviser’s remuneration has been properly explained.
However, Rosetta Fong, chief executive of Convoy Financial Services – a listed company and the largest financial advisory business in Hong Kong, said, while in support of safeguarding the consumer’s interest, there is “room for improvement” in the new rules.
“According to the requirement, only insurance brokers are incumbent to disclose the amount of commission and fee to the clients,” she said.
“It means when insurance agents and banks sell insurance products, they are not obliged to comply with this new guideline on remuneration disclosure. This is unfair to brokers and consumers will feel confused.
“This unequal arrangement might lead to improper use of such disclosed information by some illegitimate industrial players. To protect the consumers’ interest at large, standard guidelines for the whole industry should be considered to enhance the level of transparency.”
[Click here to read a recent profile of Convoy Financial Services]
In response to our earlier reports, Selina Lau, general manager, communications & committee at the Hong Kong Federation of Insurers said: “The Important Fact Statement highlights and summarizes the most important facts relating to an ILAS policy, including the purpose of the purchase, affordability, suitability, charges, payment terms, and alerting the customer that remuneration may be paid to the intermediary that recommends/sells the ILAS product.
"We believe that the IFS will help ensure customers have a clear understanding of the key features of the products they purchase and the risks involved.”
Click here to read some initial industry reaction published yesterday
