4 March 2024
The Insurance Authority (IA) has taken three separate disciplinary actions against former insurance agents on fit and proper grounds. In each case, an order was imposed prohibiting the individual from applying for an insurance intermediary licence for a specified period.
In two of the cases the former agents used false academic certificates to demonstrate satisfaction of the minimum education requirements to be insurance agents under the former self-regulatory regime. Clearly, such actions are not fit and proper.
Individuals who display such a lack of ethics and integrity, violate the trust on which insurance market must be founded and are deserving of punishment through prohibition from re-entering into insurance market, until they are able to demonstrate such a complete reformation of character so as to show themselves worthy of being trusted. This process can only start with, and must be underpinned by, full acceptance and admission of the wrongdoing. Prohibitions of 3 years were imposed in these cases. In imposing the prohibitions the IA was constrained to act in accordance with requirements under the self-regulatory regime which applied at the time. Under the new (and current) regime, the Insurance Ordinance makes such actions a criminal offence prosecutable by the IA. The IA will not hesitate to prosecute any attempt to submit a false academic certificate as part of a licensing application to the fullest extent of the law.
Insurers also have a role to play in ensuring that, when onboarding prospective new insurance agents, they verify that the applicant meets the fit and proper requirements, including the verification of academic qualifications. If the IA finds any candidate slipping through the net of an authorized insurer’s controls, the insurer can expect its controls and processes to be placed under immediate scrutiny and the insurer will be answerable for any weaknesses identified.
In the third case, the former agent was also a subsidiary intermediary registered under the Mandatory Provident Fund Schemes Ordinance (Cap. 485) (MPFSO). The former agent was disciplined by the Mandatory Provident Funds Scheme Authority (MPFA) for contravening its conduct requirements (following an investigation by the IA as the frontline regulator of subsidiary intermediaries from the insurance sector). The contravening conduct involved the transfer of benefits without client authorization and impersonation of the client to obtain account information.
In determining whether a person is fit and proper to be or remain a licensed insurance intermediary, the IA must take into account the person’s ability to carry on insurance regulated activities competently, honestly and fairly, the reputation and integrity of the person, and any disciplinary action taken against the person by, inter alia, the MPFA. The contravening conduct of the individual as subsidiary intermediary under the MPFSO involved dealings on behalf of a client that were similar to carrying on insurance regulated activities. Accordingly, the IA took the view that in impugning his fitness and properness to be a subsidiary intermediary under the MPFSO, the individual had also impugned his fitness and properness to be an insurance intermediary, and imposed a prohibition to run concurrently with that imposed by the MPFA.
These cases demonstrate the determination of the IA to use its disciplinary powers to reinforce the need for insurance intermediaries to be fit and proper persons to perform their role, thereby ensuring the insurance market continues to be founded on trust.
For further information on the IA’s enforcement work, please see the “Enforcement News” section of the IA’s website. Public disciplinary actions against licensed insurance intermediaries may also be searched on the Register of Licensed Insurance Intermediaries on our website.
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