ENG-2016 — Page 112

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Financial and Monetary Affairs

for new insurance products and will apply on 1 January 2017 to new and existing policies of current products. It makes reference to a 'fair treatment of customers' principle announced by the IAIS, and sets out comprehensive requirements, including the benefit illustration for participating policies, sales processes, remuneration of intermediaries and post-sale control requirements.

To manage risks underwritten by insurers, reinsurance is one of the most important tools. The IA issued a guidance note on reinsurance on 1 June 2016 which sets out the principles for establishing reinsurance management frameworks and related arrangements, and provides guidance on how the IA will assess the adequacy of an insurer's reinsurance arrangements. The guidance note will come into force on 1 January 2017.

The number of Mainland visitors buying long-term insurance policies in Hong Kong has been increasing. In view of this, the IA has required, from 1 September 2016, all new applications of individual long-term policies made by Mainland visitors to include an Important Facts Statement for Mainland Policyholder which reminds them the entire selling process must be conducted in Hong Kong and highlights the factors and risks they need to consider before taking out insurance policies in Hong Kong.

A robust corporate governance regime is a cornerstone of Hong Kong's success as an international financial centre. It is also important to the long-term development of the insurance market. In this regard, the IA issued on 7 October 2016 a revised guidance note on the corporate governance of authorised insurers that incorporates high-level standards adopted internationally. It will take effect in two phases, on 1 January 2017 and 1 January 2018.

In 2016, the OCI established a Fintech Liaison Team to facilitate the fintech community's understanding of the regulatory regime and act as a platform for key stakeholders to exchange ideas about fintech innovation.

Mandatory Provident Fund System

As one of the pillars of retirement protection, the MPF System helps the Hong Kong workforce set aside savings for retirement. Unless exempted, employees and self-employed persons (SEPs) aged 18 to 64 are required to join an MPF scheme. At the end of 2016, about 85 per cent of the employed population were covered by the MPF System or other forms of retirement schemes.

The MPF System is employment-based. An employer is required to contribute 5 per cent of an employee's relevant income (RI) as mandatory contribution for the employee, subject to a maximum RI level. Employees are required to make the same amount of contributions for themselves unless their Rls are below the minimum level. SEPs must also contribute 5 per cent of their Ris, subject to the minimum and maximum levels.

MPF accrued benefits, that is, accumulated mandatory contributions and investment returns, must be preserved until a scheme member reaches the age of 65 or meets a statutory condition for early withdrawal of benefits.

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