September 2025
The Mandatory Provident Fund Schemes Authority (“MPFA”) has announced the cessation of unsolicited telemarketing activities by MPF intermediaries in respect of MPF-related products or services with immediate effect on 31 March 20251. The move comes as part of a series of ongoing initiatives to strengthen internal controls and compliance by MPF intermediaries. We take this opportunity to draw the wider insurance industry’s attention to this measure.
Those insurers and insurance intermediaries who are also MPF intermediaries, will be aware of the cessation and will have implemented controls and processes to reinforce this. For those in the wider insurance industry, the MPFA’s move serves as a salutary reminder of the importance of maintaining robust controls and governance over any ongoing unsolicited telemarketing related to non-MPF insurance products. This is imperative to prevent the issues that arose in the MPF sector from emerging within the insurance sector.
As the front-line regulator of MPF intermediaries which are authorized insurers and licensed insurance intermediaries, the IA is fully supportive of the MPFA’s announcement. With every employee in Hong Kong being mandated to have an MPF account and the option to move that account between providers, it has not been unknown for the IA to have received complaints about someone using cold-calling to get individuals to move to a new MPF provider, when the individuals do not want to do this. Sometimes these calls have crossed the line between “misunderstanding” (which is bad enough) and outright dishonesty, with the caller subsequently posing as the customer to contact the existing MPF provider to obtain sufficient details to effect the transfer (which it turns out the customer did not want). Worse still, cold calls offering to help individuals apply for early withdrawal of their MPF (through false declarations) and to invest the monies in other so-called investment plans, serve as outright fraud. Whilst these types of activities have been rare (even before the cessation), the severity of their consequences for individual victims could have been catastrophic. It is, therefore, entirely right that no member of the Hong Kong working population – each of whom is mandated to have an MPF account - is prejudiced by the type of cold-call scams to which MPF schemes are vulnerable. The cessation of cold-calling across the MPF industry is therefore a needed and justified move by the MPFA.
This, of course, begs the question of whether the same cessation should be mandated across the wider insurance industry.
As the regulator of the insurance industry, it is important that the IA considers this matter in the specific context of the insurance sector and the insurance buying public. This mirrors the approach taken by the MPFA, which evaluated the issue through the lens of MPF schemes and the characteristics of the Hong Kong working population, each of whom is mandated to have an MPF account.
In this regard, there are key differences between the two industries. These differences are highlighted in the type of complaints the IA receives on telemarketing.
In the insurance sector, complaints related specifically to cold calls have been a fractional portion of the overall complaints the IA has so far received. Beyond the number, a closer examination also reveals differences in the nature of the complaints. As stated, in certain MPF cold-call complaints, the activities of the callers being complained about, suggest dishonesty and sometimes fraud (posing as the customer, or trying to convince a customer to make false declarations to withdraw his/her MPF). Insurance-related telemarketing complaints, by contrast, have focused more on the cold caller being an irritant or the persistence of the caller in trying to sell insurance products.
While irritation and frustration caused by cold-calling certainly do not reflect well on the insurance industry, it remains to be seen whether these concerns justify an outright cessation at this stage - particularly when taking into account the following considerations:
All insurers and insurance intermediaries are subject to the provisions of the Personal Data (Privacy) Ordinance (Cap. 486) which limit the use of personal data for direct marketing. The sales process for savings and investment long-term insurance policies in particular, have further safeguards with the compulsory financial needs analysis process making it virtually impossible for an individual to buy such product just through a single phone call. Further, once the purchase is made, the cooling-off period allows time for further reflection on the decision and the buyer can back out without any prejudice caused.
The insurance industry has also taken steps to self-regulate itself. These steps are aimed at minimizing the irritation and frustration that cold-calling activities may cause. The Hong Kong Federation of Insurers (“HKFI”) has issued a Code of Practice on Person-to-Person Marketing Calls (“Code of Practice”), which was recently updated in 20242. The Code of Practice provides clear guidelines on cold calling practices including but not limited to the hours and days of calling, frequency of calling, disclosure of caller’s identity, and unsubscribe request.
There will also be those policyholders who, having chosen not to ignore the cold-call or hang up as soon as an insurer’s name has been mentioned, have ended up buying an insurance product which meets their needs as a result of the call. For the most part, unlike MPF schemes, buying insurance is not mandatory and one has to recognize that there are some customers who have bought vital insurance they have needed, that they might not even have known about, but for a cold-call. One should not underestimate the value of this to these policyholders.
Another consideration is that times are changing. To call a smartphone “a phone” these days is becoming more and more of a mislabel. Using one’s mobile to receive or make a phone call is becoming a diminishing activity, and is rapidly being replaced by a preference for non-face to face messaging.
Taking all these factors into account, might it not be better to let cold-calling (subject to proper and robust controls and governance) in the insurance industry continue? Even though it may sometimes be irritating, it can still be useful – particularly for those who have benefited from the insurance coverage they have bought through telemarketing. Indeed, given the way mobile phone usage is changing, might it not be better to allow telemarketing to evolve (and perhaps fade out) naturally, rather than for it having to be banned by the insurance regulator?
This is, perhaps, where our mind sits at the moment. However, the IA will keep the position under review and will act as cold-calling’s executioner, if we see the same type of problems as have arisen with MPF cold-calls, ever emerging with insurance related cold-calls.
We expect this article to serve as a catalyst to insurers and insurance intermediaries that do still carry on telemarketing to ensure that these activities are conducted with integrity, in line with the applicable data protection and insurance regulatory requirements, and in a manner that puts customers’ interests first and treats them fairly.
As insurers will know, the IA in its conduct inspections, reviews the corporate culture of the insurer. The manner in which an insurer (and its insurance intermediaries) conducts telemarketing activities can be a strong indicator of its corporate culture. Poorly managed telemarketing can have a significant adverse impact on an insurer’s reputation. The IA therefore expects insurers to have implemented proper controls, oversight and training for all its telemarketing activities. Insurers must also ensure that telemarketing-related complaints are handled in a manner that is both fair and responsive. All relevant risks associated with telemarketing must be factored in and mitigated by the insurer’s governance and control system, which must also be subject to regular review.
The MPFA’s move to end cold-calling is undoubtedly the right one for that industry. While concerns exist, the IA considers there is still room to allow a degree of flexibility for the insurance sector at this stage. However, this flexibility hinges on the discipline of insurers and insurance intermediaries who are carrying on telemarketing. They must heed the warning that this article conveys – for the good of the insurance buying public and for the good of the insurance sector. The IA’s current measured approach therefore should not be seen as a lack of attention to the matter, but rather as a belief that self-discipline and accountability may be more suitable at this stage for the insurance market, than a complete prohibition. It is sincerely hoped that this trust will not be misplaced or otherwise, the IA may have to consider adopting a stronger regulatory response.
Notes:
1 Cessation of Unsolicited Calls for Marketing MPF-related Products 3 or Services