Monthly Archives: September 2014

Hong Kong’s Notorious Insurance Industry Should Not Be Given Exemptions from the New Competition Law

In its latest annual report, the Hong Kong Federation of Insurers (HKFI) announced that it is contemplating seeking exemptions from the Competition Ordinance, which will go into effect next year. The ordinance will “prohibit conduct that prevents, restricts or distorts competition”.

HKFI Seeks for Permission to Break the Law

Excerpt from HKFI’s 2013-2014 annual report

If the Competition Ordinance is to serve its purpose, then the Competition Commission should not grant any exemptions requested by the insurance industry. The reason why Hong Kong insurers currently overcharge for most of their services and do not offer better products is because players in the industry engage in very limited competition.

One of the major factors contributing to this phenomenon is the fact that the industry has been allowed to form cartel-like bodies (HKFI, PIBA, CIB) for the purpose of pseudo-regulating itself.

Output Restriction

Output Restriction - HKCC

Image from the Hong Kong Competition Commission’s website.

Currently, Hong Kong insurers do not sell commission-free ILAS products directly to consumers. As a result, all ILAS products have extremely high fees, which in part finance large sales commissions. Any consumer who might wish to purchase ILAS is forced to go through an agent or broker and to pay a massive commission, even if the consumer doesn’t need the service of an intermediary.

The reason why insurers do not offer ILAS products directly to consumers is probably because the vast majority of Hong Kong consumers have no reason to buy these products (even if the fees were low). Packaging funds in an insurance policy does nothing except expose consumers to unnecessary risks that do not exist when buying funds directly or through a fund platform like Fundsupermart. For example, consumers who buy ILAS lose all SFC regulatory protection; they typically have a much lower-qualified intermediary; and they are exposed to the credit risks of the policy issuer. Due to these severe drawbacks, insurers must pay large commissions to motivate an unethical/unqualified sales force to trick consumers into buying products which they are better off not owning.

Although ILAS is bad for most Hong Kongers, it could potentially be useful to some foreigners, assuming the fees were reasonable. This is because some countries give favorable tax treatment to investment products which are issued by insurance companies. Thus, some foreigners might be interested in purchasing cheap commission-free ILAS products. 

So why don’t insurers offer such products?

It may be because the market is too small for such an initiative to be profitable, but more likely it is because a cartel of insurance brokers would boycott the products of any insurance company who tried to do this.

iFAST (a leading fund platform provider) was subjected to such treatment last year when it offered Singapore consumers a 50% rebate on commissions for term and whole life insurance. [See here.]

Price Fixing

Price Fixing - HKCC

Image from the Hong Kong Competition Commission’s website.

iFAST Central is a fund platform which is very similar to ILAS, except it is cheaper, better, and not offered by an insurance company.

iFAST’s platform fee is a maximum of 0.3% per year, but it can be as low as 0.1% for individuals who invest large sums.

The platform fee for ILAS products is multiples higher, usually 1% to 1.5% per year (in addition to other outrageous fees which finance commissions).

Insurance companies should be able to offer their service at a price which is competitive with iFAST’s price, but they are not doing it. They seem to have agreed with each other (either explicitly or implicitly) to not wage a price war.

In a fair marketplace, they would be forced to compete with iFAST’s prices, but instead, all of them play dirty by literally bribing brokers with obscenely large commissions that are not fully disclosed to consumers. iFAST does not play this deceptive corruption game, since its fees are transparent.

It is probably no coincidence that all insurers offer brokers roughly the same unconscionable commission rates. These standardized rates are likely the result of “price fixing”, and the high costs are ultimately passed on to consumers.

As soon as the Competition Law goes into effect, the Competition Commission should eradicate this corrupt, anti-competitive practice of bribing brokers with ever larger commissions.

Ideally, commissions should be banned altogether. A growing number of developed countries have decided to do this, including the UK and Australia.

Why ILAS Commissions Violate the Prevention of Bribery Ordinance

Brokers have a duty to act in their clients’ best interests. If insurance companies offer obscene undisclosed commissions to induce brokers to rip off their clients by selling them exploitative ILAS products, then both insurers and brokers violate Section 9 of the Prevention of Bribery Ordinance (PBO). The punishment for this offense is up to 7 years imprisonment and a fine of up to $500,000 HKD.

Commissions only become compliant with the PBO if clients give permission to their brokers to receive commissions, andbefore giving such permission, [clients] have regard to the circumstances in which [permission] is sought.

In other words, if clients are not told all the facts which they’d need to make an informed decision, then any permission they give is meaningless as far as the PBO is concerned.

This means brokers are breaking the law if they fail to disclose pertinent facts about the commission payments they receive.

Anyone with common sense will immediately realize that ILAS victims were not adequately informed about their brokers’ remuneration, because if they were informed, they wouldn’t have bought ripoff products or permitted their brokers to receive outrageous commissions at their expense.

Prevention of Bribery Ordinance - Highlighted

The key sentence is circled in red. Note that insurance brokers are the agents of their clients (the principals), not the agents of insurance companies. The PBO does not apply to the relationship between consumers and insurance agents, because insurance agents are the agents of their employer (an insurance company), not the agent of their client.

“Regard to the Circumstances”

Clients need to have “regard to the circumstances” in which their brokers are asking for permission to receive a commission. This phrase is not very specific, but it would obviously include any “circumstances” that give rise to conflicts of interest or are essential to a client’s understanding of the product being sold.

For example, if a broker introduces a contractual ILAS savings plan, the client should be made aware that the broker’s commission depends on the length of the contract signed. (A 5-year plan will pay 5 years of upfront commissions. A 10-year plan will pay 10 years of upfront commissions, and a 25-year plan will pay 25 years of upfront commissions.)

This arrangement creates a conflict of interest in which the broker has a financial incentive to advise his client to sign the longest possible contract, even though longer contracts are extremely dangerous and end in disaster nearly 100% of the time.

Moreover, because the broker will be paid for decades of service before he provides it, he won’t have a strong financial incentive to actually provide the service. He could just take the money and run. Clients need to know this.

Clients should also be informed that their brokers’ upfront commissions are paid for with their “initial contributions”. This means, in effect, that clients’ first years of savings are not really saved. Most units purchased in the initial period are guaranteed to be reabsorbed by fees to pay for brokers’ commissions (among other expenses incurred by the insurer).

Clients would also need to know that selling funds within ILAS pays commissions which are multiple times higher than selling funds directly. This “circumstance” creates a conflict of interest in which brokers have a financial incentive to recommend ILAS instead of “direct” funds, even though ILAS is far more expensive and dangerous.

If a broker who recommends ILAS is not licensed to sell funds directly, then the client should be made aware of this fact, since it is another conflict of interest which could bias the advice being given.

If a client gives a broker permission to receive commissions for selling a 25-year ILAS savings plan, for example, but the broker has not informed the client about all the important “circumstances” as described above, then the broker has breached the PBO and faces serious penalties.

Commission Disclosure in the Past

Many brokers have historically disclosed that they receive a commission for selling ILAS products. However, this disclosure was often just a single sentence written in fine print buried somewhere in the middle of 30 to 40 pages of densely-worded forms that needed to be signed (forms that few people had the time or patience to read thoroughly).

Here is Convoy Financial Services’ disclosure in 2012:

Convoy Commission Disclosure

This an excerpt from an ILAS application form issued by Convoy Financial Services in 2012. The commission disclosure is a single sentence accompanied by zero elaboration regarding conflicts of interest arising from the commission structure of the savings product being sold. This is the only disclosure within dozens of similar-looking forms.

The above disclosure is so minimal that it obviously does not satisfy the requirements laid out in subsections (4) and (5) of Section 9 of the Prevention of Bribery Ordinance.

Even though the above form has been signed, it is totally meaningless as far as the PBO is concerned.

Commission Disclosure Now

Recently, insurance regulators started requiring brokers to more clearly disclose that they receive a commission for selling ILAS products. However, these new disclosures are just as minimal as the disclosures of the past. The only thing really new is a statement which says clients may ask their broker about the amount of commissions the broker will receive.

This disclosure is pitifully inadequate because clients wouldn’t know to ask about other conflicts of interest inherent in the commission structure, such as the fact that brokers have an incentive to recommend toxic long-term contracts and to recommend ILAS over direct purchase of funds.

Brokers would have to decide for themselves whether to disclose this extremely important information. However, it’s unlikely that many would do it because it would almost certainly result in the client rejecting their recommendation.

Below is an example of the new commission disclosure required by regulators. It is still not compliant with the PBO.

Harvest 105 Commission Disclosure

Excerpted from a Standard Life ILAS brochure.

The Truth about HKFI’s ILAS Propaganda Campaign

The Hong Kong Federation of Insurers (HKFI), the industry’s so-called self-regulatory body, launched a media campaign last year to misinform the public about ILAS. This was mentioned in HFKI’s latest annual report:

HKFI's ILAS Propaganda

Excerpt from HKFI’s 2013-2014 annual report

HKFI outrageously and falsely claimed that ILAS “is a simple and effective vehicle for regular saving”. The truth is that ILAS is one of the most complex and deceptive investment products ever invented. Most ILAS savings plans are scams, which defraud investors out of their first years of savings. The products are only “effective” as a means of destroying savings, not accumulating it.

HKFI also touted the “death benefit” as one of the attractive features of ILAS. This so-called death benefit is usually no more than an extra 1% of the account value, which is a mere fraction of the annual fees. (Fees can exceed 13% in a single year.) This meager death benefit is a complete ripoff for consumers seeking life protection.

HKFI also mentioned that ILAS offers “enhanced consumer protection”. This is certainly the worst of all the lies. Real consumer protection would mean outlawing these products, imprisoning the executives who are responsible for creating and distributing them, and then refunding all the victims who have been scammed.

Coverage in International Adviser

Last year, when HKFI’s propaganda campaign was launched, International Adviser (the industry’s mouthpiece) wrote a story entitled, “HKFI campaign counter attacks on ILAS“. It said:

The Hong Kong Federation of Insurers has launched a media campaign to counter recent “unbalanced and negative” attacks on Investment Linked Assurance Schemes by regulators and the media.

The article quoted Rosetta Fong, CEO of Convoy Financial Services, a large predatory advisory firm which earns 90% of its revenue from ripping off consumers (by flogging ILAS products for obscene commissions). Rosetta Fong is on the intermediary panel of International Adviser, which allows her to “provide guidance in the editorial direction of the magazine.” She 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.”

Both of her sentences were false.

Most ILAS products are scams and therefore not “neutral”. They are criminal.

HKFI’s misinformation campaign was definitely not needed. Consumers are already bombarded with a never-ending stream of lies from the marketing departments of the evil companies that sell ILAS (e.g., Convoy). The regulators and media were doing the right thing by warning consumers about the overwhelming “negative or risk side of the product”, since the crooks who sell it definitely are not.

Shocking ILAS Statistics (#6): PIBA Imposed Zero Disciplinary Actions In the First Half of 2014


To Serve & To Protect Crooks

PIBA is one of the two self-regulatory bodies for insurance brokers. During the first half of 2014, PIBA punished zero brokers for misconduct. If an outsider had no other information, he might be tempted to believe that this is an industry of angels.

He would be mistaken. Most brokers are swindlers (or else extremely ignorant, inexperienced, and naive). The ILAS products they sell are so horrific that no informed, rational human being would ever consider buying them.

The least bad ILAS products are exploitative (due to unjustifiably high fees), and the worst ILAS products are criminal (due to fraudulent design).

Every sale necessarily requires multiple violations of PIBA’s own Code of Conduct, which states that brokers should offer objective advice and act in the best interests of clients.

This Code is obviously unenforced and totally meaningless. It’s primary purpose is to deceive the public into believing that the industry is being regulated according to high principles, when in fact, the industry is largely an unregulated pack of thieves.

PIBA - Zero Disciplinary Actions Imposed

A screenshot from PIBA’s website showing that zero disciplinary actions were imposed in the first half of 2014. Data is not published for previous years.

History of the ILAS Ripoff

Several decades ago, ILAS was invented in the UK as a clever way to exploit a feature of the UK tax code. By packaging funds within an insurance policy, it resulted in a 15% tax break which was not available when investing in funds directly. Due to this favorable tax treatment, ILAS products were attractive, despite their extortionate hidden charges.

In March 1984, the UK government changed the tax rules for insurance, and the huge tax benefits of ILAS ceased to exist. These products should have disappeared. However, because the products paid such obscenely high commissions, they had become extremely popular with brokers. Since the majority of brokers were unscrupulous and greedy, they did not stop selling the products, even though the products were no longer good for consumers.

ILAS products eventually spread across the globe, becoming especially concentrated in places that were both wealthy and poorly regulated, i.e., Asia and the Middle East.

In Hong Kong, ILAS products were originally sold mainly to expats by expat brokers, but it eventually morphed into a giant scam with locals ripping off locals (and foreign insurers reaping most of the rewards).

ILAS never offered tax benefits to Hong Kongers, so it never should have been sold to them. The unscrupulous/ignorant people who now sell it claim that the outrageous fees are justified because the products offer so-called “free” fund-switching.

This is nonsense. Non-insurance fund platforms, such as Fundsupermart and iFAST Central, offer free switching, access to more funds, better due diligence of funds, and fees which are only a small fraction of ILAS fees.

iFAST offers a better service at a much lower cost, not because it has superior technology, but because it charges a fairer price.

Insurance companies are able to grossly overcharge only because they deceive consumers, buy off the brokers, and (non)regulate themselves.

PIBA’s Unenforced Code of Conduct

Excerpts of PIBA’s Code of Conduct have been copied below. Each excerpt is followed by a brief explanation of how brokers have trashed that section of the Code.

Treat Your Client Fairly

Brokers are supposed to “protect the interests of clients”, yet recommending ILAS products, especially contractual savings plans, is never in the interests of clients.

Brokers are also supposed to “uphold the integrity fostered by PIBA”, but since PIBA fosters zero integrity, there’s no integrity for brokers to uphold.

Honesty and Fairness

Because of extortionate fees, ILAS products are always unfair to consumers. If brokers told the truth to clients, then clients would not buy the products. This means every broker who sells ILAS is being dishonest.

Broker Must Know the Product and Disclose All Material Facts

If some brokers are not dishonest, then, at the very least, they are negligent. PIBA’s code of conduct requires brokers to “know the product” and to “disclose all material facts”.

If brokers did their research, they’d know that most ILAS savings plans are scams, and the rest are just plain awful. Brokers have no justification for recommending ILAS when better and much cheaper investment options are available.

Advice Must Be Appropriate and in Clients' Best Interests

ILAS is not appropriate for Hong Kongers and definitely not in their best interests. Brokers are clearly giving bad, self-serving advice.

Information Provided to Client Should Be Accurate and Non-Misleading

ILAS products are ripoffs, so no broker can sell them without being inaccurate and misleading.

Recommendation Should Be Appropriate and Client Must Understand Nature of Product and Recommendations

ILAS is never appropriate for Hong Kongers. Obviously, brokers are not ensuring that clients understand the products. If clients understood, they wouldn’t buy them.

Fees and Remuneration Must Be Fair and Reasonable and Charachterized by Good Faith

ILAS products pay significantly higher commissions than every other investment product on the market, yet the people who sell this toxic waste are generally the least qualified people in the financial industry. This crazy remuneration system is neither fair nor reasonable.

25-year ILAS savings scams pay upfront commissions which are literally hundreds of times higher than other savings plans. This is not just insane; it is criminal.

If a broker accepts 25 years of commissions upfront, it is extremely “disproportionate to the service rendered to the client”. Brokers rarely provide more than a few years of service, and the service is always poor, evidenced by the fact that ILAS shouldn’t have been recommended in the first place.

Conflicts of Interest Must Be Avoided or Disclosed

If conflicts of interest should be avoided, then brokers should not accept commissions from insurance companies. Brokers should instead charge clients a fee for service.

Commissions are a huge conflict of interest (a type of legalized bribery), and this must be disclosed if it can’t be avoided. Presumably, most brokers have been disclosing that they receive a commission for selling ILAS products (usually in very fine print buried in pages of legalese that few people have time to read).

However, brokers have not been disclosing ALL of the conflicts of interest, such as the fact they they receive MULTIPLE TIMES MORE UPFRONT COMMISSION when they recommend highly toxic 25-year savings scams, as opposed to 5-year savings plans or non-contractual savings plans.

This lack of disclosure not only breaches PIBA’s Code of Conduct, but it also clearly violates Section 9 of the Prevention of Bribery Ordinance. According to paragraph (5), commissions are regarded as a criminal offense unless clients give brokers permission to receive commissions, and “before giving such permission, have regard to the circumstances in which it is sought.”

No clients would give a broker permission to accept 25 years worth of commissions upfront if they knew that other plans paid much less (or even nothing) in advance. They especially wouldn’t grant permission if they knew that the commissions were financed by defrauding them out of their first years of savings.

Brokers will be lucky if the ICAC doesn’t eventually fine them and throw them in prison.

Shocking ILAS Statistics (#5): ILAS Policies Are Being Surrendered Almost Twice as Fast as They Are Being Sold

ILAS Policies Sold vs. ILAS Policies Lapsed or Surrendered

Data was obtained from OCI’s website here and here.

The yellow row in the chart shows that ILAS policies are being surrendered nearly twice as fast as they are being sold. Sales are the lowest they’ve been since the 1990s, and surrender rates have never been higher.

The Hobbins Lawsuit Was the Catalyst

Sales began plummeting in 2012, in the wake of the historic Hobbins lawsuit, which threatened to wipe out the entire crooked industry.

Hobbins was mis-sold a handful of ILAS products with 5 to 8 year contracts (not any 25-year savings scams, the worst kind). Hobbins argued that the commissions paid by the insurance companies to his broker were so obscenely high (and not fully disclosed) that those commissions were actually a form of bribery intended to induce his broker to screw him for the benefit of itself and the insurers.

Anyone who reads Section 9 of the Prevention of Bribery Ordinance will see that Hobbins’ argument was clearly correct. However, Hobbins lost his case because the judge was too cowardly to challenge the status quo and to potentially destroy a multi-billion dollar predatory industry which never should have existed.

Despite his personal loss, Hobbins inadvertently performed an invaluable public service. His lawsuit set in motion a chain of events which are still impacting the industry to this day.

Because everyone knew that his bribery argument was correct, insurance regulators were forced to react. They introduced a set of very weak commission disclosure rules which they thought were just barely adequate enough (maybe) to prevent the industry from being subjected to more bribery lawsuits, while still allowing the industry to easily rip off unsuspecting consumers. These new regulations were a joke, but the increased scrutiny of ILAS products, especially in the media, have put a major dent in sales. 

The biggest blow came from HKMA, the bank regulator. It implemented much stricter rules than the self-serving insurance regulators. These rules have completely annihilated ILAS sales in banks. As of June 2014, sales were negative, due to customer refunds.

Exit Penalties Are a Major Injustice

The chart at the top of this post shows that hundreds of thousands of ILAS policies are being terminated every year.

Tragically, when polices are terminated, investors are hit with extortionate exit penalties which are as high as 100%. This is a major injustice, since the vast majority of investors should have never been sold these products in the first place.

At the same time that investors are being penalized, the unscrupulous individuals who exploited these investors are walking away with a fortune, penalty-free. 

This is disgusting, shameful, and unbelievably scandalous. The police, the ICAC, the regulators, the legislators, the courts—at least one of them needs to step up and put a stop to this.

ILAS Policies Terminated - 2001 to June 2014

Data was obtained on OCI’s website here.

Shocking ILAS Statistics (#4): Insurers Collected Over Half a Trillion Dollars in ILAS Premiums Since 1997

ILAS In-Force Business 1997 to Mid 2014

Annual data was collected from OCI’s website here. Provisional data was collected from here. Dollars are in HKD. Data prior to 1997 is not available. If a policy is “in-force”, it has not been terminated, and insurers are still collecting their unjustifiably high fees. According to OCI, “office premiums” means (a) for policies with the single payment of premium, the premiums paid by the policy holders during the financial year; or (b) for policies with regular mode of payment, the annualized premiums of the policies. “Annualize” means to calculate as for an entire year. Office premiums is to be distinguished from revenue premiums. “Revenue premiums” means the premiums paid and payable to the insurer during the financial year. “Net liabilities” means the policy reserve set aside by the insurer before reinsurance as at the end of the financial year. The policy reserve will include the amount provided for the value of the units held for policy holders and the amount required to be provided for claims and expenses, etc.

The yellow section of the chart shows that insurers reported over half a trillion HK dollars in office premiums since 1997. Data isn’t available yet for 2013 and 2014, but it would probably push the figure near $600 billion.

The amount of fees insurers have collected is definitely in the tens and maybe in the hundreds of billions.

The #1 bestselling ILAS product is 25-year savings scams. When insurers sell these, they typically steal the first two years of savings, and then they collect at least 1.5% annually on the rest (in addition to the fund managers’ fees).

In the book, “The Great Expat Financial Planning Ripoff“, savings plans were called a “multi-million dollar worldwide scam”. Maybe this statistic was correct at the time the book was written, but now, the industry has seemingly grown into a multi-billion dollar scam (even if calculated in USD).

The above chart shows that nearly 1.7 million ILAS policies were still in-force as of two months ago. This is truly horrifying, given that 99% of people in Hong Kong should not own an ILAS policy.

Clearly, the quality of investment advice in Hong Kong is abysmal. Regulators need to wake up and address the root of the problem: the commission-based advisory model. The UK has banned this corrupt system, and Hong Kong should do likewise.

Shocking ILAS Statistics (#3): Over Two Million ILAS Savings Plans Have Been Sold Since 2001

Number of ILAS Policies Sold in Hong Kong 2001 to Mid 2004

Data was obtained here and here from OCI’s website. Dollars are in HKD. Statistics for 2013 and 2014 are provision and could be revised in the near future. Data is not available for years prior to 2001.

The yellow section in the chart shows that more than 2 million “regular premium” ILAS policies have been sold in Hong Kong since 2001. These products are commonly known as “savings plans”. Most of them are scams. The few which are not scams are rarely sold, since they pay significantly lower upfront commissions.

What Percentage of the Local Population Has Been Scammed?

According to the Census and Statistics Department, Hong Kong has approximately 7.2 million people and 2.5 million households.

Some ILAS victims are foreigners; some are mainland Chinese; and some victims have been scammed multiple times. This means that the number of Hong Kongers who have been scammed is probably a bit less than 2 million.

But even if the number of local victims were much lower, just 0.75 million, this would still represent 10.4% of the population and as much as 30% of families.

If any politicians were to attempt to raise public awareness about this issue—and fight for justice—it would surely pay off at the ballot box.

Hypothetical Number of Families Who Were Scammed

Hypothetical Number of People Who Were Scammed

Shocking ILAS Statistics (#2): 25-Year Savings Scams Dominate the ILAS Market

Contract Length of ILAS Policies Sold in First Half of 2014

Data was obtained here from OCI’s website. Dollars are in HKD.

Contract Length of ILAS Policies Sold in 2013

Data was obtained here from OCI’s website. Dollars are in HKD.

The charts above show that more than 65% of all new ILAS premiums paid in the first half of 2014 went into 25-year savings plans (or worse). The number was 47% in 2013. This is a major scandal, given that these plans defraud investors out of their first years of savings. (See here.)

The police and regulators would be negligent if they didn’t put an immediate stop to this.

5-Year Plans vs. 25-Year Plans

An adviser receives 5 years’ worth of commissions upfront when he sells a 5-year plan. He receives 25 years’ worth of commissions upfront when he sells a 25-year plan.

As the above data shows, advisers have a strong bias towards selling 25-year plans. This is unsurprising, given that the total upfront commission payout is five times larger.

The reason 25-year plans can pay five times more commission is because these plans defraud investors out of five times more money.

Given that advisers have a legal obligation to act in the best interests of their clients, advisers would almost certainly be screwed if a client ever tried to sue them for selling this toxic waste.

It’s also a miracle that the ICAC hasn’t yet started imposing fines and dishing out prison sentences, as the structure of these commission payments clearly violate the Section 9 of the Prevention of Bribery Ordinance.

Non-Contractual Plans

A 5-year plan isn’t nearly as bad as a 25-year plan, but it is still a ripoff.

Non-contractual plans, like this one, do not defraud investors out of their first months or years of savings. It is the only type of ILAS product that should ever be sold, yet almost no advisers sell it, because it doesn’t pay several years of commissions upfront. Instead, these products pay commissions on a month-by-month basis. If a client decides to terminate such a plan, then the adviser stops receiving commissions. This commission structure forces advisers to earn their pay.

When an adviser sells a contractual plan, he locks in as much as 25 years worth of commissions immediately. The commission is financed by defrauding investors out of their first years of savings. 99.9% of advisers will never perform the service they were paid for. Most of them move to a different company or leave the industry within a few years. Even if they did stick around at the same advisory firm for 25 years, they are still virtually guaranteed to not have to do the work they were paid for. Nearly 100% of investors surrender 25-year plans early.

Index Funds & Fundsupermart

Non-contractual ILAS plans aren’t a scam, but they are still a rotten deal for most investors. The annual fees are unjustifiably high.

Hong Kongers have absolutely no good reason to buy funds through an insurance company. It just forces them to pay an additional and completely unnecessary set of outrageous middleman fees. Hong Kongers should always buy funds directnot inside an insurance policy.

The vast majority of investors should buy low-cost index funds. The fees are literally just a tiny, tiny fraction of the fees charged in a non-contractual ILAS plan. Index funds also outperform the majority of actively managed funds (the type of funds offered in an ILAS).

For up-to-date information about index funds, investors can browse through Andrew Hallam’s website. This article is a good place to start.

If investors think they are smart enough to find the smartest fund manager, and they are determined to invest in actively managed funds, then they should use Fundsupermart—not ILAS.

Fundsupermart is similar to ILAS products in that it offers access to hundreds of funds with free fund-switching. However, Fundsupermart provides its service at a small fraction of the cost of ILAS. To learn more, see here. – Translated into Chinese

The vast majority of ILAS victims in Hong Kong read and speak Chinese—not English. Consequently, they can’t utilize the information in this blog, simply because they can’t read it.

In order to address this problem, some friends are translating several of my blog posts into Chinese. I will be publishing these as soon as they are ready.

I have also added a Chinese tab (‘中文‘) to the blog menu. Chinese ILAS victims can use it to find links to resources, blog posts, news articles, discussion forums, and other information related to ILAS which is written in Chinese. This webpage will be updated continuously.




Chinese Translation of Section 16A of the Theft Ordinance





  • 有一種叫「合約儲蓄計劃」的投資相連保險計劃完全是一個騙局。這些產品敲詐消費者多達兩年的儲蓄。
  • 合約儲蓄計劃的保單文件充滿敲詐及哄騙,以隱藏極高的收費,營造吸引的假象。舉例來說,很多計劃聲稱不含前期費用,這是騙人的,因為多達首兩年的儲蓄早就預設會被收費蠶食。很多計劃均提供大百分比的「獎賞」單位,這是假的,因為大部分的單位均肯定會循收費被索回。
  • 保險公司明顯違法,應該被告欺詐。數以十萬計的合約保單應被廢止,而承保人應歸還他們從保單持有人身上盜取的所有金錢。



投資者毫無理由要透過合約儲蓄計劃來投資。市場上提供非合約儲蓄計劃的承保人最少有一個,就是Royal Skandia(萊斯基亞),其計劃並無隱藏的前期收費。另外,投資者亦可直接(即不透過承保人)投資基金,或者使用基金選擇更多、收費更低,而且沒有隱藏費用的基金平台(例如Fundsupermart),。



一團糟( ‘A Crock of Shit’

最近筆者與一個資深的理財顧問傾談,他指合約儲蓄計劃完全是一團糟(a crock of shit)。Dictionary.com網站指,「a crock of shit」的意思是「比糞便更惡劣的謊言和敲詐」。另一位顧問則寫了一本名為《The Great Expat Financial Planning Ripoff(中譯﹕僑民理財計劃大騙局)》的書去踢爆這些產品。在該書的序言,他指合約儲蓄計劃是「數量驚人的世界騙局」,其影響廣泛,連「臭名遠播的尼日利亞騙徒也眼紅」。


Harvest 101 Investment Plan








Zurich Vista Brochure Cover




在香港電台最近的一個訪問中,《南華早報》記者Jasper Moisewitsch說﹕「我們分析過ILAS介紹冊,向讀者解釋內容,但根本無從入手。我們甚至找了一位獨立理財顧問來剖釋這些小冊子,嘗試重組當中的內容,但真的不行。這是不可能的,它們實在是極之複雜。」


 Zurich Vista Surrender Charge Calculation

Chinese Translation of Zurich Vista Surrender Penalty Calculation



根據維基百科,「魯布·戈德堡機械(Rube Goldberg machine)是一種被過度設計的複雜機械組合,以迂迴曲折的方法去完成一些其實非常簡單的工作。」這個詞語源於漫畫家魯布·戈德堡的一幅漫畫。

Rube Goldberg Alarm Clock

Chinese Translation - Rube Goldberg - Simple Alarm Clock




Zurich Vista - No Upfront Charges (Highlighted)

Chinese Translation - Zurich Vista - No Upfront Charges





初始供款期(當中所有供款均肯定會被費用蠶食)、初始供款賬戶(其價值是誤導的,並被嚴重誇大)、初始單位 (實際上屬於承保人,對投資者來說完全沒有、或只有很小的價值)、獎賞單位(假的)、行政費用(從無價值的初始單位中扣除)、退保罰款(即是入場費),以及目標供款期(有如剝削的鎖定期)。







Harvest 101 Statement - April 2013 [Redacted]

Chinese Translation - Fraudulent Account Statement - Sample

















Generali Vision Contract - Initial Units (1)

Generali Vision Contract - Initial Units (2)

Chinese Translation - Generali Administration Fees





Harvest 101 Administration and Exit Charge

Chinese Translation - Harvest 101 Admin and Exit Fees



換個角度思考,即是每「取回」34%的初始單位,便有 6%行政費被奪去。




Harvest 101 Reabsorption of Initial Units

Chinese Translation - Harvest 101 - Reabsorption of Units





















Generali Definition of Initial and Notional Units

Explanation: “Initial Units” are “Notional Units”. Generali buys underlying funds corresponding to all “Notional Units”, which includes “Initial Units”.

Chinese Translation - Generali Definitions of Units









Harvest 101 Death BenefitChinese Translation - Harvest 101 - Death Benefit







A) 供款 + 1%
B)真實的賬戶價值 + 1%









Zurich Vista - Stopping Premiums - Highlighted

Chinese Translation - Zurich - Must Keep Paying to Avoid Penalty




Vista Bonus

Chinese Translation - Zurich - Bonus Units







根據最近的媒體報導,93%的投資者並無完成任何年期的投資相連保險計劃,更有99% 並無完成長達25年的合約(但筆者懷疑其實有關數字應接近100%)。








  • 6% 的保費
  • 6% 的行政費
  • 多於1%的相關基金費用









To Suit Your Advisers Greed for Commission - Harvest 101 Contribution Payment Term

Chinese Translation - Harvest 101 - Target Contribution Period






Target Contribution Period Illustration - Harvest 101

Chinest Translation - Harvest 101 - Breakdown of Commissions









Misleading Marketing Material by Standard Life - Numbered

Chinese Translation - Standard Life - Misleading Marketing


  1. 透過投資相連保險投資對香港人而言其實並無「好處」。即使有,那極其量只是少量好處,但弊處卻多得鋪天蓋地。絕大多數的人都沒任何理由涉獵這些產品。
  2. 投資兼享人壽保」是龐大的騙局,因為它讓保險公司以完全不能為產品增值而且毫無必要的「管理」服務之名義,敲詐高昂的中介費。此外,大多投資相連保險提供的人壽保障極少(一般只是賬戶價值的1%),根本毫無意義。
  3. 聲稱投資相連保險能夠「靈活投資」,簡直就是厚顏無恥的謊言。大多這些產品綑綁投資者530年,而且提早退保會觸發高昂罰款。(事實上,正如筆者在前文已解說,鎖定期及退保罰款都是虛假。它們的目的是為了掩飾前期費用。)
  4. 聲稱投資相連保險擁有「投資透明度」是另一個厚顏無恥的謊言。投資者都不清楚保險公司是否利用他們的供款購買真正的基金單位。
  5. 聲稱投資相連保險提供「清晰的投資成本資料」亦是無恥的謊言。賬戶結單是騙人的,而且費用詳情非常複雜,只有數學家才懂計算。
  6. 投資相連保險並沒有提供真正「多元化的投資選」。雖然未必是全部,但大多現有的基金都是由基金經理積極管理,費用較高。投資選擇中明顯缺乏低收費的指數基金。
  7. 投資相連保險的費用如此高昂,聲稱任何一個特性「免收」費用都是荒謬,包括轉換基金。另外,所有基金都沒有豁免收取買賣差價(轉換費的一種)。
  8. 獎賞單位非但沒有「提升回報潛力」,更會導致損失擴大,因為保險公司利用這些單位說服投資者簽署更長的合約,表示將更多的金錢倒進大海。 


Zurich Vista Awarded Best Regular Premium Investment Product (Asia) 2013

A screenshot from Zurich’s website. Click HERE to see for yourself.

Chinese Translation - Zurich's Award-Winning Scam


蘇黎世保險在其網站誇口「豐盛人生」榮獲「最佳定期保費投資產品」(即最佳投資相連保險儲蓄計劃)。此獎項由「國際人壽大獎」頒發,由業界雜誌International Adviser贊助。 





你可能會問:「為什麼像《International Adviser》這些業界刊物會頒發獎項給這些最厲害的儲蓄騙局?」

The Great Expat Financial Planning Ripoff》一書中名為「金融刊物的可疑角色」的一章,應可為這個疑問提供有力的答案。 





筆者最近一次翻閱《International Adviser》時,雜誌正顯示著友誠保險購下的一大幅廣告。  

一名《International Adviser》的編輯表示「國際人壽大獎」是「表揚卓越的產品設計」,而評委都是「由一班精選的獨立財務顧問組成,都是能夠代表業界的精英。


Readers’ Choice》大獎的得獎者是由讀者選出。然而,如果讀者是投保人便不得參與投票。只有銷售人員才可投票。其參加表格如此寫道: 








本文載於無分類,於201489Lindell Lucy撰寫。