In an email to its members late last month, the HKFI outlined plans for a widespread media campaign, across television, print and the internet, which it said would reinforce the “strengths and benefits of ILAS products”.
The email, which was signed by Stuart Fraser, chairman of the ILAS Working Group, said: “ILAS products have come under significant scrutiny by regulatory bodies, consumer groups and the media at large.
“Many of the views presented have been unbalanced and in some cases negatively biased against ILAS products resulting in the true value and benefit that these products bring to consumers being largely ignored.”
The industry’s problems stem, in part, from a decision earlier this year to introduce more punitive rules for the sale of the products.
These new measures, brought by the Office of the Commissioner of Insurance in July, include the introduction of full disclosure of adviser commission and a requirement that every consumer who buys an ILAS product is called by the provider and asked a series of questions to “check up” on the advice they received.
According to a memorandum sent by the HKFI to life insurance companies in April, the questions to be asked by providers include checks the consumer understands all risks associated with the products and its full cost.
In addition to greater regulatory scrutiny, the products have also attracted negative press, with one particularly high profile case of a potential “mis-sale” of the product being reported by the South China Morning Post.
Despite these obvious headwinds, IFAs still believe the products have their place with consumers.
Rosetta Fong, chief executive of Convoy Financial Services, the largest independent financial adviser in Hong Kong, said: “The HKFI campaign is needed to educate the public about the whole picture of ILAS by including its benefits rather than just focusing on the negative or risk side of the product.
“In the first place, the nature of ILAS itself is actually neutral and it is only one of the investment tools that could be considered for managing one’s investment portfolio.”
This view was echoed by Mark Rawson chief executive of the Henley Group.
“The issue is not around ILAS as such but appropriate use of products for a client’s circumstances,” said Rawson. “There are 100 reasons why ILAS works for certain clients and 100 more reasons why not for others, the problem in the industry is matching the appropriate products and services to the appropriate clients.
“Linked to this of course, the industry must look at itself as to why there is such a drive to use ILAS ahead of other products and this is to do with charging and commission structures that probably do need a fuller review and update as they are the cause of some of the inappropriate use of ILAS.”
A recent report by Hong Kong’s Consumer Council about ILAS schemes came to some strong conculsions. click here to find out more.