Ahead of it assuming regulatory oversight of insurance intermediaries in Hong Kong, the Insurance Authority is consulting on how much to fine them in the event of wrongdoing.
The HKIA launched a two-month public consultation on its draft ‘Guideline on exercising power to impose pecuniary penalty in respect of regulated persons under the insurance ordinance’, on 26 October.
Three times gains or losses avoided
According to the HKIA, it will be empowered to “take a number of disciplinary actions” against those “guilty of misconduct” or who are “not fit and proper”.
It suggests that any penalties should be “effective, proportionate and fair”.
One type of disciplinary action it may take is ordering the person to pay a fine that is not greater than HK$10m (£1m, $1.3m, €1.1m) or three times the amount of the profit gained or the loss avoided.
All circumstances in the case will be considered and the IA said it will take into account a number of factors.
These include the nature, seriousness and impact of the conduct; the behaviour of the person since the conduct was identified; as well as their disciplinary record and compliance history.
“The financial resources of the regulated person is also a factor the IA proposes to consider in determining whether to impose a pecuniary penalty on the regulated person and the penalty amount,” the HKIA said.
Additionally, anyone accused of wrongdoing will have the a “reasonable opportunity of being heard” before the HKIA levies any fines.
The consultation closes on 27 December 2018.
Court of public opinion
The HKIA is due to take over the regulation of insurance intermediaries from three self-regulatory organisations in mid-2019: the Federation of Insurers, the Confederation of Insurance Brokers and the Professional Insurance Brokers Association.
As part of its preparation, the newest regulator on the block is seeking public comment on a variety of initiatives.
Earlier this month, it released a consultation document on assessing fit and proper, continuing professional development and education standards.