A proposal to fine insurance salespeople found guilty of misconduct up to HK$10 million was going too far, the Hong Kong Federation of Insurers (HKFI) told the government yesterday.
The industry body submitted a report to the Financial Services and the Treasury Bureau expressing its concerns over the fines, and also the government's plan to set up a new insurance authority to regulate the sector.
Unlike Britain, Australia and Singapore, whose insurance sectors are monitored by independent regulators, Hong Kong's is overseen by the government's Office of the Commissioner of Insurance, which has no power to control agents.
The government in October has a three-month consultation on law drafting to set up the Insurance Authority in 2015.
The proposed new regulator, which would have the power to license and regulate insurance companies and their 70,000 salespersons, would have about 240 staff and an annual budget of HK$200 million.
Allan Yu Kin-nam, the chairman of an HKFI task force, said the high level of proposed fines was unacceptable.
"We support the setting up of the new authority in principle but are opposed to giving the regulator the power to impose maximum fines of HK$10 million for misconduct," Yu said. "Many salespeople only earn about HK$10,000 a month. How can they afford to pay such a high fine? The new law might discourage talented people from joining the industry."
A government spokeswoman said the draft law to establish the new insurance authority would be tabled in the Legislative Council in the second half of this year. Until then, the government would continue to listen to the views of the industry. She said the new regulation aimed to protect the interest of policyholders and was not excessive.
The proposed maximum HK$10 million fine is concurrent with those imposed by the Securities and Futures Commission on errant brokers or fund managers.
But Yu said some other professionals such as lawyers or accountants faced fines of only HK$500,000 for misconduct.
The HKFI was also concerned about plans to give the new insurance authority the power to temporarily suspend insurance companies or their staff for serious alleged misconduct, even before the completion of investigations.
"At least, there should be a limit set for such temporary suspensions of three to six months," Yu said.