Dear Connie Lau, Ombudsman, Hong Kong:
As former CEO of the Consumer Council, you developed a reputation as a consumer champion. I am writing to you about an issue which adversely affects the life savings of millions of consumers of investment-linked insurance products (ILAS). I hope you will take this matter very seriously.
At the beginning of this year, I filed a complaint with your office against the SFC. I alleged that the SFC negligently—and perhaps deliberately—abdicated its legal authority to regulate the conduct of individuals and corporations who sell ILAS products and give advice regarding the underlying investments.
Many of these products are outright scams, and there is no shortage of industry insiders who will verify that this is true. (Just browse through the info on this blog.) What all of these scams have in common is that the manufacturers of the scams—big international insurance companies—pay gargantuan undisclosed commissions to the ethically compromised individuals who sell the products.
If SFC had not abdicated its regulatory authority, these scammers would have been required to disclose the gargantuan commissions they received, which would have alerted many potential victims to the dangers of the trap they were falling into.
Actually, if SFC had been responsible, it never would have authorized scam ILAS products in the first place. The products never should have reached the market.
Consequently, I believe SFC should be held accountable for the plight of most ILAS victims (hundreds of thousands, if not millions). I also think the SFC ought to pay compensation to the victims. The SFC can certainly afford it. A recent news report states that the SFC is “drowning from too much money”.
In response to my complaints about the SFC, your office sent me the following reply:
Your office instructed me to give SFC a chance to address my questions. If SFC did not do so, or if SFC “revealed any evidence of maladministration”, the Ombudsman said it would then consider pursuing an investigation.
I have given SFC ample time to reply to my questions, but it has not done so. I even visited SFC’s office three weeks ago, accompanied by several victims and a member of the Legislative Council. At that meeting, SFC continued to refuse to answer any questions.
I hope your office agrees that there are strong grounds for pursuing an investigation. I will send you a follow-up email shortly, providing additional information.