Regulatory Reminders

December 2023
 

In 2022, a joint Mystery Shopping Programme (“MSP”) was conducted by the IA, the MPFA and the Hong Kong Monetary Authority on over 20 authorized insurers and licensed broker companies to gain insights into how Qualifying Deferred Annuity Policies (“QDAP”) and Tax-Deductible Voluntary Contributions are being marketed in Hong Kong and identify areas for improvement and good practices. The MSP covered a number of areas assessing the degree of fair treatment to customers, including know-your-customer procedures, financial needs analysis, suitability of recommendations and explanation of product features and risk disclosure.

The key findings from the MSP exercise were set out in a joint circular issued to the industry on 23 December 2022. The IA has since, during the course of 2023, held meetings with the concerned insurers and broker companies to go through the findings and recommendations specific to them. These insurers and broker companies and, indeed, all those offering QDAP are expected to take into account the MSP findings to promote a sound culture relating to the sale and marketing of QDAP and adhere to the principle of treating customers fairly and acting in customers’ best interests, and demonstrate improvement in inspections carried out by the IA going forward.