Hongkongers should guard against unscrupulous sales practices under the new scheme that allows people to choose their Mandatory Provident Fund service provider, a legislator warns.
Accountancy sector representative Kenneth Leung Kai-cheong said people needed to be on their guard as about 30,000 MPF agents tried to attract business under the new arrangement.
"I think the unscrupulous sales practices for this scheme will be similar to how the agents sell other financial products. That means they may exaggerate the return of the MPF products to make the product look overly attractive," Leung said.
Under the MPF's semi-portability plan, the city's 2.4 million workers can transfer their accumulated contributions to a new provider once each year. However, the employers' contribution needs to stay with the original provider. The transfer takes six to eight weeks.
The Mandatory Provident Fund Schemes Authority (MPFA) has stepped up supervision by requiring approval for all MPF marketing materials, but Leung said loopholes may exist.
"For example, although everything is written in the promotion materials, agents may not explain all the information to their clients, and skip the parts they don't want the clients to know about, like management fees," Leung said.
The MPFA has already issued guidelines that MPF agents must follow, or have their licences suspended or revoked. Agents will be supervised by regulators who will conduct on-the-spot inspections, among other controls.
The MPFA did not have a strict definition of what offences would lead to an agent's licence being suspended or revoked, a spokeswoman said.
In the past few years the MPFA has received about 10 complaints a year regarding the scheme, and most complaints were about low returns and other issues related to the product's quality, she said.
The Consumer Council had received nine complaints about the MPF in the first nine months of this year, a council spokeswoman said. It heard three cases last year and none in 2010. The complaints were all about product quality.
In one case, a person complained that the monthly statement did not show clearly the amount of the management fee.
Meanwhile, AIA Pension and Trustee yesterday announced a rebate programme to lure more clients.
People who moved their MPF contribution to AIA would get a rebate of 0.45 per cent on their management fee in the first year, and then a 0.2 per cent rebate from the second year onwards.
AIA offers 25 MPF products with management fees of between 0.99 per cent and 1.75 per cent.