Resumption of public service and special arrangement of Consumer Advice Centres
Consumer Advice Centres located in Tsim Sha Tsui, North Point, Sha Tin and Tsuen Wan have resumed normal service.
To reduce the risk of the spread of COVID-19, social distancing and other precautionary measures will be implemented at our Advice Centres.
Visitors are required to:
- Make prior appointment for service by calling the hotline 2929 2222;
- Wear surgical face masks and take a body temperature check before entering the Centres;
- Wait in a designated waiting area in order to reduce social contacts with other visitors.
(Notes: Visitors may experience a longer waiting time because of the precautionary measures.)
Consumer Council’s Views on the Draft Guideline on Exercising Power to Impose Pecuniary Penalty in Respect of Regulated Persons under the Insurance Ordinance
- The Consumer Council (the Council) is pleased to provide its views to the Insurance Authority (IA) regarding the Draft Guideline on Exercising Power to Impose Pecuniary Penalty in Respect of Regulated Persons under the Insurance Ordinance (Cap. 41) (“Draft Guideline”).
- The Council in general supports the Draft Guideline that sets out the considerations in which the IA would take into account when exercising its power to impose a pecuniary penalty in respect of a person who is or was a regulated person (individual or firm) in the event that the person is guilty of misconduct or is not fit and proper.
- It is stipulated in the Draft Guideline that the considerations will include protecting existing and potential policy holders and the public interest; promoting proper standards of conduct of regulated persons; and deterring regulated persons who have engaged in misconduct from benefitting of the infringement or engaging in further misconduct, etc.
- The Council is of the view that consumer interests should be expressly covered under the consideration of protecting existing and potential policy holders. In cases where the misconduct is serious or causing detriments (e.g. culpable acts or omissions) to the interests of the policy holders, the Council would expect that a higher level of fine is determined. For reason that regulated persons play a crucial role in disseminating accurate and comprehensible information of which consumers heavily rely upon to make their choice amongst the increasingly complicated insurance products.
- In regard to the disciplinary actions the IA may take, a pecuniary penalty not exceeding the greater of HK$10 million or three times the amount of the profit gained or loss avoided will be imposed per case, as suggested in the Consultation Paper. When determining the fine level, it is noted that the IA would take into consideration the nature, seriousness and impact of the conduct; the behaviour of the person since the conduct was identified; the previous disciplinary record and compliance history of the person; and other relevant factors. The Council is aware that the Draft Guideline has included assessing the financial resources of the regulated person into consideration so that “a pecuniary penalty should not have the likely effect of putting the regulated person concerned in financial jeopardy”.
- The Council is of the view that such consideration of the financial resources of the regulated person would in some way make the penalty affordable, and that its deterrent effect on misconduct would be reduced or not be achieved. The financial impact to the regulated person being disciplined should not be formed as a prime consideration as stated in the Draft Guideline. To promote good practices of the industry and to effectively impede misconduct of the regulated person, the Council considers that penalty should be set with effective deterrent effect, especially when it causes critical consumer detriment, instead of drawing emphasis to the financial status of the regulated person.
- In determining the level of fine, the Council recommends that the IA should also consider the size of the organisation if the regulated person is a firm; and the previous local and overseas disciplinary records and compliance history of the person in Hong Kong and overseas markets. Furthermore, the IA could consider the number of valid grievance cases involved for assessment of the appropriate amount of fine. Reference can be found from the latest Disciplinary Fining Guidelines of the Securities and Futures Commission (updated in August 2018) that the number of persons affected by the misconduct be used as the multiplier in assessing the appropriate level of pecuniary penalty. For example, where a regulated person has contravened the Guideline resulting in an insurance product being mis-sold to five persons, the IA may consider impose a fine not exceeding $10 million for each affected person. The Council believes this would provide a strong deterrent effect against potential wrongdoers.
- With regard to the discretionary approach to disclose the fining decision (paragraph 3.3 of the Draft Guideline referred), the Council considers it important for the IA to publicise its decisions of imposing pecuniary penalty to regulated persons contravened the conduct rules, so as to meet the objective of deterring further misconduct and other regulated persons from violation of the rules and guidelines under the Insurance Ordinance.
- Lastly but not the least, the Council welcomes the IA to become the lead regulator to take over and regulate all insurance intermediaries in Hong Kong that raises a unified standard across the industry, to the benefits of the insuring public.