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Legislative and Regulatory Framework > Conduct in Focus Issue 5 Article 2 Enforcement Update

Enforcement Update

August 2022

The disciplinary actions taken by the IA underpin the insurance regulatory framework with the credible threat of fair and proportionate enforcement. Some of our recent disciplinary actions include:

  • Prohibiting a former technical representative (broker) from applying for a licence for 5 months, for not paying client monies into client account, paying the monies as premium to an insurer for the wrong policy and then, when trying to rectify the matter, getting his client to say that it was the client (rather than the technical representative) who had made the mistaken payment.
  • Reprimanding an agent for distributing by e-mail “self-made” marketing materials that included certain inaccurate and misleading statements, including representations regarding the return that could be obtained by purchasing a particular insurance policy using premium financing and not specifying the risks involved, and using confusing language which might suggest that the product was a banking product rather than an insurance policy. The material was distributed to a limited number of persons.
  • Prohibiting a former technical representative (broker) from applying for a licence for the duration that he had been suspended by the Mandatory Provident Fund Schemes Authority (40 months) for making transfers without a scheme member’s authorization, misusing the scheme member’s personal information, forging the member’s signature on certain forms, and impersonating the scheme member in calling a Mandatory Provident Fund trustee to obtain account information.

For the latest news on our enforcement work, please check our website.

Continuing Professional Development (“CPD”) related enforcement

In addition, the IA has taken disciplinary action against 91 individual insurance intermediaries for their non-compliance with the CPD requirements during the 2018/19 assessment period1  and is currently dealing with a voluminous number CPD non-compliance and/ or late reporting cases for the 2019/21 combined assessment period, with a view to taking disciplinary action in line with the IA’s new CPD penalty framework (which came into effect last year).

In dealing with these CPD non-compliance cases, we have discovered that some individual insurance intermediaries have resigned or left the industry some time ago, but their appointing principals failed to notify the IA. Principals are reminded of their obligation to notify the IA of the termination of appointment of their licensed insurance individual agents, technical representative (agents) or technical representatives (brokers) (as the case may be) under section 64R of the Insurance Ordinance. Failure to so notify amounts to an offence liable to a fine at level 52.

With the new CPD assessment period commencing on 1 August 2022 (and running from 1 August 2022 to 31 July 2023) individual licensees are reminded of their obligation to complete CPD hours. CPD requirements are the hallmark of all professions and it is incumbent on members of the profession to comply with these requirements so as to provide members of the public with confidence that the advice and services they receive will be based on up to date knowledge. Failure to comply will result in disciplinary action.

Note:

1 https://www.ia.org.hk/en/legislative_framework/circulars/reg_matters/files/20220110CircularCPDbreachEngUpload.pdf
2 A fine at level 5 amounts to HK$50,000 under Schedule 8 of the Criminal Procedure Ordinance (Cap. 221)