ENG-1993 — Page 96

FINANCIAL AND MONETARY AFFAIRS

72

all authorised insurers and requires them to submit financial statements and other relevant information to the authority annually. It provides that any person who is not considered by the authority to be a fit and proper person to be associated with an authorised insurance company cannot acquire a position of influence in relation to such a company. It also empowers the authority to intervene in the conduct of the business of insurance companies in certain circumstances. Where the authority has cause for concern, it may take remedial or precautionary measures to safeguard the interests of policy-holders and claimants, including the limitation of premium income, the restriction of new business, the placing of assets in custody and petitioning for the winding-up of the company involved.

Self-regulatory measures to strengthen professional discipline in the insurance market have been formulated by the insurance industry, after consultation with the govern- ment. The measures involved the adoption by the industry in 1989 of two Statements of Insurance Practice governing the writing of insurance contracts for long-term and general insurance business, and the establishment in February 1990 of an Insurance Claims Complaints Bureau, which provides an independent avenue for resolving claims disputes arising from personal insurance policies. Enabling legislation is to be introduced to support the self-regulatory system under which no person shall be allowed to act as an insurance intermediary unless he is a registered insurance agent or an authorised insurance broker. The self-regulatory system will benefit Hong Kong as a developing international insurance

centre.

The Occupational Retirement Schemes Ordinance, providing a registration system for voluntarily established occupational retirement schemes, was brought into force on October 15, 1993. The Commissioner of Insurance was appointed the Registrar of Occupational Retirement Schemes to take on the responsibility for the regulation of private sector retirement schemes. The objective of the ordinance is to provide greater certainty that retirement scheme benefits promised to employees will be paid when they fall due. The ordinance requires all schemes operating in, or from, Hong Kong to be either registered with, or exempted by, the Registrar. All registered schemes are required to comply with certain basic requirements. These include requirements on asset separation (the assets of a scheme must be kept separate and distinct from the assets of the employer or the administrator); independent trusteeship (there should be at least one independent trustee who must not be the relevant employer himself, his employee or associate); restricted investments (prohibiting any loan to the employer of the scheme or his associate out of the scheme's assets, and any excessive investment in the business undertaking of the employer); funding (the assets of the scheme must be sufficient to meet its aggregate vested liability); independent audit and actuarial reviews; and submissions of annual financial statements to the Registrar. There are also requirements for disclosure of information, concerning the operation of the scheme, to its members.

Under the ordinance, existing retirement schemes are required to apply for registration or exemption, before October 15, 1995. It is estimated that there are about 25 000 retire- ment schemes currently in operation in Hong Kong.

The Securities and Futures Commission

The Securities and Futures Commission (SFC) was established on May 1, 1989, following the enactment of the Securities and Futures Commission Ordinance, which represented a first important phase in the overhaul of securities legislation in Hong Kong and the