Scope seen for tighter regulation of insurance-linked investments
HK's two-tier regulation puts some investors at risk, especially with insurance-linked funds, says lawmaker who helped set up framework
Regulation of the financial sector in Hong Kong does not properly protect retail investors and should be tightened, said a lawmaker who oversaw the drafting of the relevant legislation more than a decade ago.
Sin Chung-kai, who was chairman of the legislative committee responsible for the Securities and Futures Bill, published in late 2000 and enacted in 2003, says the city's two-tier system of regulation has created gaps, leaving the potential for unlicensed products to be sold undetected.
"I do not have any intention to escape my responsibilities. Supervising these selling activities seems to be insufficient," Sin told the South China Morning Post when asked about a clutch of mis-selling scandals that have reverberated through the expatriate-focused wealth management industry in recent years.
Some US$10.3 billion in new money was invested in licensed funds last year, according to data from the Hong Kong Investment Funds Association, which does not track unlicensed funds.
After 13 years, it is time the government should review [the regulations]
Many unlicensed funds are marketed directly to retail investors by firms that take advantage of a two-tier regulatory structure that gives investors different types of protection depending upon which regulator oversees their adviser and investment account.