The Consumer Council (the Council) is pleased to submit its views to the questions raised in the Consultation Paper, issued by the Insurance Authority (IA), that have direct implications to the interests of consumers as follows:
Question 1
Do you agree that the proposed new minimum education and professional qualification requirements for individual licensees are appropriate?
In response to the new educational structure in Hong Kong and to ensure individual licensees are competent in understanding the sophisticated insurance products and giving sound advice and service to consumers, the Council supports the proposal of raising the minimum education standard that individual licensees should acquire adequate language proficiency, at least in one language either Chinese or English, as well as knowledge and skills in number and data.
Question 2
Do you agree that the proposed new minimum education and professional qualification requirements for responsible officers are appropriate?
The Council agrees that university or post-secondary education training would lay a good foundation for responsible officers, taking greater accountability on an insurance agency, able to comprehend the relevant legal and regulatory requirements, maintaining proper controls and establishing effective risk management. Hence, the Council supports that a responsible officer should possess a bachelor or higher degree yet relevant professional qualifications and experience are of equal importance in assessing one’s competency.
As mentioned in paragraph 35 (c) of the Consultation Paper that responsible officers should be subject to higher education requirements for one of the reasons that they are expected to be familiar with regulatory requirements such as those relating to data protection, anti-money laundering and prevention of bribery. The Council is of the view that responsible officers should also be reminded to take note of consumer protection related laws including but not limited to Control of Exemption Clauses Ordinance, Supply of Services (Implied Terms) Ordinance, and Unconscionable Contracts Ordinance when engaging in regulated activities.
Question 3
Do you agree that the proposed new experience requirements for responsible officers are appropriate?
The Council appreciates a benchmark requirement of a minimum of 5 years’ experience in the insurance industry, including a minimum of 2 years’ management experience, would be applied to all responsible officers of licensed insurance agencies under the new regime. The Council considers the qualitative aspect, and the breadth and depth in managing subordinates and running an office should also form part of the assessment criteria in evaluating the suitability of the responsible officers, apart from the years of management experience as currently proposed. For instance, their scope of responsibility taken and number of subordinates and clients recorded should be provided for assessment of their suitability. In addition, their experience on overseeing consumer enquiries and complaints should be included as part of the requirements.
Regardless of whether the insurance intermediaries are applied through the alternative path for becoming a responsible officer (i.e. experienced insurance intermediaries who already possess a minimum of 15 years’ experience in insurance-related work would be exempted from the proposed new education requirements) under the new regime, the Council would expect that the proposed new experience requirements for responsible officers should be applied to all if there is a change of role as they are previously licensed.
Question 4
Do you agree that the proposed professional competence requirements for firms are appropriate?
On top of the proposed professional competence requirements for firms which include suitable corporate governance, effective internal controls and risk management procedures, and adequate policies and procedures in relation to recruitment, training and supervision of staff, the Council is of the view that proper understanding on consumer rights and an effective resolution mechanism in settling consumer disputes are also important to increase consumer satisfaction and confidence, thereby the development of the industry. Hence, it is suggested that firms should develop such mechanism to become necessarily fit and proper under the assessment.
Besides, to ensure individual licensees and responsible officers to acquire sufficient knowledge to support the growing complexity of insurance products and to perform professionally, firms should have in place and provide appropriate internal training and assessment, monitor and assure their compliance of the requirements, and maintain proper records to discharge their required responsibility.
Question 5
Do you agree that the proposed increase of minimum number of CPD (Continuing Professional Development) hours from 10 to 15 hours per year is appropriate?
In comparison of the minimum CPD requirements with other jurisdictions which are provided in the Consultation Paper, the proposed new requirements in Hong Kong (15 hours) are still distant from that of Singapore (15-30 hours) and the United Kingdom (35 hours). To enhance consumer protection and for industry development, the Council recommends that the minimum CPD hours should be raised to a comparable level of that of Singapore to enhance professional knowledge and skills of the local individual licensees progressively from 20 hours per year for the first two years to 30 hours per year. The CPD hours required for technical representatives (agent) engaging in restricted scope travel business should also be increased gradually from 3 hours per year to 9 hours per year. The Council also suggests a review and comparison of compulsory topics adopted in Hong Kong with other jurisdictions be considered, with an aim to align with the requirements internationally.
Observing that the insurance products have become more sophisticated and technological advances in distribution, the Council recommends the IA to conduct regular review on the CPD topics to catch up with consumer needs and market developments.
Question 6
Do you agree that the proposed introduction of a minimum number of CPD hours for compulsory topics, i.e. “Ethics or Regulations” is appropriate?
As honesty, fairness and integrity are considered as crucial requirements to determine a person to be fit and proper for an insurance licence to be granted, the Council appreciates the introduction of a compulsory CPD topic requirement of “Ethics or Regulations” but suggests, as mentioned in the part under Question 5, a review on the minimum number of hour requirement with other jurisdictions. The Council also considers that compulsory trainings on “Ethics or Regulations” is necessary for both individual licensees and licensed technical representatives (agent) who engage in restricted scope travel business, as well as responsible officers. To keep up with the development of consumer demand, the Council recommends to review topics for compulsory training from time to time, as mentioned in the answer to Question 5 above.
Question 7
Do you agree that the assessment period should run from 1 August of the relevant year and end on 31 July of the following year?
Given that the proposed assessment period appears to have no direct implication to the interests of consumers, the Council does not comment on this question.
Question 8
Do you agree that the proposed relaxations for individual licensees who are deemed licensees are appropriate?
As deemed licensees have met certain qualification standard of the current professional competence requirements, such as passing the Insurance Intermediaries Qualifying Examination and fulfilling the CPD requirements, the Council has no objection to the proposed relaxations of minimum education qualification requirements for deemed licensees with a view to value their longstanding contributions in and maintain stability of the industry.
However, to ensure accountability and quality of individual licensees, other determination factors and requirements of a fit and proper person such as the person’s ability to carry on a regulated activity competently, honestly and fairly; the reputation, character, reliability and integrity of the person; the person’s financial status or solvency; and any disciplinary action has been taken against the person by relevant authority or regulatory organisations; should strictly be followed and complied.
Question 9
Do you agree that the proposed transitional CPD requirements for individual licensees who are deemed licensees are appropriate?
Provided that the proposed transitional CPD requirements (i.e. to standardise the assessment period, beginning on 1 August of a year, for all individual licensees) do not have direct implication to the interests of consumers, the Council does not comment on this question.
Overall comments
The Council in principle supports the new requirements for providing better protection for policy holders (consumers).
Insurance is a high value and long-term product in which consumers demand professional advice and service from the industry. If the agents fail to perform at the time when needed, it would be highly detrimental to the interest of consumers. Viewing that there had been over 300 consumer complaints received each year from 2016 to 2018, not to mention other possible avenues in the market for a consumer to file a complaint, the Council considers it necessary to improve quality of the insurance intermediaries, particularly on advice/recommendations given during the sale and post-sales stages at which responsible and prompt actions to follow up are required.
To further enhance professionalism and competence of the insurance intermediaries, the Council believes in determining the requirements of “fit and proper” for insurance intermediaries should be made comparable with that of the licensing intermediaries from other regulated industries such as the banking and securities sectors in the local and overseas, covering financial status or solvency and ability to carry on regulated activity competently, honestly and fairly.
For instance, the Monetary Authority of Singapore (MAS) in its Guidelines on Fit and Proper Criteria specified that one of the factors included for assessment of the honesty, integrity and reputation of a relevant person would be whether the relevant person has been the subject of any complaint made reasonably and in good faith relating to activities that are regulated by MAS or under any law in any jurisdictions. The Council considers this is also relevant to the IA’s assessment of whether an individual is fit and proper person for protection of the interests of policy holders (consumers).
