ENG-1995 — Page 109

FINANCIAL AND MONETARY AFFAIRS

Enabling legislation came into force in June 1995 to support the self-regulatory system, under which no person is permitted to act as an insurance intermediary unless he is a registered insurance agent or an authorised insurance broker. Insurance companies are required by law to comply with the Code of Practice for the Administration of Insurance Agents. The purpose of the self-regulatory system is to enhance the professionalism of the industry and to benefit Hong Kong as a developing international insurance centre.

The Occupational Retirement Schemes Ordinance provides a registration system for voluntarily established occupational retirement schemes. The Commissioner of Insurance, as Registrar of Occupational Retirement Schemes, is responsible 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 must meet certain basic requirements, including: asset separation (the assets of a scheme must be kept separate and distinct from the assets of the employer or the scheme administrator); independent trusteeship (there should be at least one independent trustee who must not be the employer, his employee or an associate); restricted investments (any loan to the employer of the scheme or his associate out of the scheme's assets is prohibited, as is any excessive investment in the business undertaking of the employer); funding (the assets of the scheme must be sufficient to meet its aggregate vested and past service liabilities); independent audit and actuarial reviews; and the submission of annual financial statements to the Registrar. There are also requirements for disclosure of information regarding the operation of the scheme to its members.

In July 1995, the Occupational Retirement Schemes Ordinance was amended to modify the requirement that assets of schemes in pooling agreements be kept separate, to allow investments to be made in certain securities markets and to clarify the requirement for the operation of group schemes and for notification of changes of scheme particulars. These changes seek to address practical difficulties encountered in the administration of schemes and investment of scheme assets.

By the end of the year, 12 309 schemes covering a total of 687 800 employees were registered, and 1 069 schemes were exempted.

The Securities and Futures Commission

The Securities and Futures Commission (SFC) was established in May 1989, following 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 implementation of some of the major recommendations made by the Securities Review Committee in May 1988.

The ordinance transfers to the SFC the functions of the former Securities Com- mission, the Commodities Trading Commission and the Office of the Commis- sioner for Securities and Commodities Trading. It provides a general regulatory framework for the securities and futures industries, leaving certain elements to be covered by regulations, administrative procedures and guidelines developed by the commission.

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