Regulator needed to curb cowboy practices in trust industry | South China Morning Post
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  • Feb 2, 2015
  • Updated: 6:36am
Lai See
PUBLISHED : Thursday, 25 July, 2013, 12:00am
UPDATED : Thursday, 25 July, 2013, 3:57am

Regulator needed to curb cowboy practices in trust industry

BIO

Howard Winn has been with the South China Morning Post for two and half years after previous stints as business editor and deputy editor of The Standard, and business editor of Asia Times. His writing has also been published in the Far Eastern Economic Review, the Wall Street Journal, and the International Herald Tribune. He writes the Lai See column which focuses on the lighter side of business.
 

Last month saw the first major changes to Hong Kong's Trustee Ordinance and the Perpetuities and Accumulations Ordinance since 1934. The changes are due to come into effect at the beginning of December.

The hope is that the revised ordinance will haul Hong Kong into the 21st century and enable the city to compete more effectively with jurisdictions in what is a highly competitive industry.

Laudable though the changes may be, there is one glaring omission in that there is no regulator. The recent case of shamed tax expert Deborah Annells, highlighted in this column over the past two days, indicates there is a need for a regulator.

It will be recalled that she was found by the disciplinary tribunal of Britain's Chartered Institute of Taxation (CIOT) to have acted dishonestly in six instances and, as a result, was expelled by the organisation.

She was, for example, found by the tribunal to have dishonestly used funds entrusted to AzureTrustees, her company at the time, to make payments of HK$5.2 million that were not in the interests of the trust's beneficiaries.

This is a serious matter, though ultimately no trustee money was lost, and it should be said that she denied any dishonesty.

The complaint against her was brought to the CIOT by a client, and two former co-directors, one of whom was based in Singapore.

Why, you may wonder, did these people have to go all the way to Britain to make these complaints? The answer, of course, is because there is no complaints procedure for these matters in Hong Kong. It is true that some 40 per cent of trustee services are conducted by banks and large financial service organisations, according to KPMG's recent report on Hong Kong's trust industry.

These organisations are generally supervised by the Hong Kong Monetary Authority and the Securities and Futures Commission, or both. But a large number of companies are totally unregulated and this has clearly led to abuse. Some of the stories you hear of people who have been defrauded at a time when they have lost a spouse are heartbreaking.

If Hong Kong wants to develop its trust industry then it will do itself no harm in regulating this industry.

It also seems to be the case that aspects of the regulations need to be tightened up to avoid the ambivalence over the separation of client trust funds and the funds of the administering company.

Regulation helps to create confidence in the industry and hopefully will go a long way towards eliminating the cowboys.

 

Mainland smarts

There are now some 261.33 million active smartphones and tablets on the mainland, according to the TechinAsia website, citing a report by analytics firm Flurry. Of these, it says that 65 per cent are Android devices and the rest are on iOS. Apple makes 35 per cent of smart devices used in China, while Samsung is second with 15 per cent.

Surprisingly, Xiaomi is in third place with 6 per cent in what is only its second whole year of production.

The remaining 44 per cent is supplied by other producers of Android devices. The mainland, according to Flurry, now accounts for 24 per cent of the world's smart devices.

 

The thighs have it

There is something about Japan that is very intriguing. Take the recent development, if that is what it can be called, of a PR firm in Tokyo, Witt Inc, that is paying young women to wear advertising stickers on their thighs.

This appears to be more cost-effective than paying vast sums for outdoor billboards.

The going rate for each thigh, according to the website Quartz, is US$121 a day. So far some 3,000 women have signed up. The women need to be over 18, and to have at least 20 friends on social media.

They have to take photographs of themselves wearing the stickers and upload them on to the internet.

The women are recommended to wear miniskirts and long socks so as to concentrate the attention of onlookers on the stickers.

The CEO of the ad agency told Quartz: "It's an absolutely perfect place to put an advertisement, as this is what guys are eager to look at, and girls are eager to expose."

Have you got any stories that Lai See should know about? E-mail them to howard.winn@scmp.com

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