Research from Skandia International, the offshore business of Old Mutual Wealth, shows advisers in Hong Kong are feeling uncertain about how the regulatory changes will impact their customers and their businesses. By comparison, advisers in Singapore seem a lot more certain and more positive.
In Hong Kong, where new requirements on the sale of investment-linked assurance schemes (ILAS) products including rules around commission disclosure recently came into effect, a staggering 38.1% of advisers were not sure how the regulatory changes would impact their business. Only 28.6% thought it would have a positive impact and 33.3% thought it would have a negative impact.
Advisers were slightly more certain around the impact on customers, with nearly half of financial advisers feeling it would have a positive impact on customer outcomes (47.6%); less than a quarter (23.8%) felt it would not have a positive impact, and nearly a third said they were ‘not sure’ (28.6%).
Not surprisingly, in the same survey, Hong Kong advisers voted changing regulatory requirements as the greatest challenge to their business in 2013 (40% of responses).
In Singapore, advisers were more certain about the impact their regulatory changes, namely FAIR (Financial Advisory Industry Review), would have – 50% of advisers believe the regulatory changes would have a positive impact on their business, with 44% believing it will have a negative impact. Just 6% of advisers were unsure. As with Hong Kong, Singapore advisers feel the impact on customers would be more positive, with 61.1% believing it will have a positive impact on customer outcomes; 22.2% disagreed with just 16.7% not sure.
The adviser survey took place just before the first wave of recent regulatory changes came into effect in Hong Kong. The uncertainty amongst advisers could stem from the fact that the changes were introduced at relatively short notice coupled with limited direct guidance to advisers on implementing the changes, such as how to respond to disclosure questions. Without clear guidelines there could be differences in the way advisers are interpreting the changes and this could result in a number of inconsistencies. Until these changes bed down, advisers are likely to remain uncertain as to what the impact on their business could be, especially at a time when ILAS products in general are coming under increasing scrutiny.
Further regulatory changes in the area of commission disclosure are expected in Hong Kong. However, the timing and format of further disclosures is still to be decided and could be causing further uncertainty amongst advisers.
Singapore advisers seem more certain over the impact of these changes, suggesting they have been more engaged in the proposed changes. Even though the changes are yet to come into effect, advisers are more certain as to whether they will have a positive or negative impact.
Phil Oxenham, head of proposition marketing, said:
“Regulatory change in any jurisdiction creates challenges and uncertainty for advisers. It’s important that financial advisers are provided with enough information and the changes are communicated effectively in order for them to make the required amendments in a productive manner and position them with their clients. This appears to have been more forthcoming in Singapore than in Hong Kong which has left an uncertain regulatory landscape, mirrored in the results of this survey.
“As a result, we’ve been working with financial advisers in Hong Kong and Singapore offering support via practice management tools and services to help them through the transition and position their businesses for success in the new regulatory landscape.”
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