New rules will bringer tougher conduct, corporate governance and fitness and probity obligations.
A new regulated activities regime is expected to come in to force in Hong Kong in mid-2019. All persons (not just insurance intermediaries) conducting regulated activities for reward will be subject to the new statutory licensing regime, subject to exemptions. There will be a three-year grandfathering period for brokers and agents registered when the new regime begins whereby they will be deemed to be licensed. The new regime will capture a broader range of activities than are currently regulated and will close the grey area within which unregistered pure introducers who are not insurance intermediaries currently operate.
The Insurance Authority, which has significant investigative, disciplinary and enforcement powers, will be responsible for licensing of intermediaries and will also take over their direct supervision from the current self-regulatory bodies. The regime will also introduce broader and more onerous conduct, corporate governance and fitness and probity obligations for intermediaries. The consequent increase in compliance and administrative requirements, underpinned by potential personal liability for key personnel, will likely result in consolidation within the market as smaller operations, those with out-dated systems, or previously unregistered pure introducers/ referral agents, struggle to comply, with resulting opportunities for those looking to expand their existing business or move into new lines.
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