HONG KONG - Complaints over banks delaying elected transfers of Mandatory Provident Fund monies, in order to try and retain business, are circulating in Hong Kong.
“Some of the insurers complain that when the customers want to change money around, the bankers know it, and will speak to the HR department, saying why are you making this transfer?” said an industry source speaking on the condition of anonymity.
The source added: “So the banks have advance knowledge – they can tell because of the movement of funds, so they will stop the movement of funds and try and induce the clients to stay with the bank.”
The practice, while not in black and white terms illegal, has not been raised with the regulator to date.
“The law sets out the trustee's obligations regarding transfer payments. We have enforced those obligations previously and would treat seriously any complaint that a trustee is not complying with those obligations,” said Darren McShane, executive director at the Mandatory Provident Fund Schemes Authority, which regulates MPF trustees.
Section 153 of the Mandatory Provident Fund Schemes (General) Regulation, provides that a transferor trustee must take all practical steps to ensure that accrued benefits aretransferred in accordance with a members election within 30 days of receipt of theelection.”
Although banks still dominate the system, some of the insurers have been very aggressive in picking up new MPF business.
“When there is a huge movement of funds, the banks will definitely notice this. There is competition on both sides,” said the source.
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