Mandatory Provident Fund Quiz 03

Correct: Under the Mandatory Provident Fund Schemes Ordinance (MPFSO), providing an opinion on a “material decision” constitutes regulated advice. Material decisions specifically include whether or when to make a claim for the payment of accrued benefits and the amount of such a claim. While Section 34M provides an exception for advice given through a newspaper, magazine, or publication made generally available to the public, this exception explicitly excludes any publication that is made available on a subscription-only basis. Therefore, providing such advice for a subscription fee without being a registered intermediary is a contravention of the prohibition against carrying on regulated activities.

**Incorrect:** The professional exception for certified public accountants or solicitors only applies when the regulated advice is “wholly incidental” to their professional practice, which does not cover a dedicated business providing MPF advice. The media exception is narrow and does not extend to private broadcasts or subscription-based digital content. Additionally, the legal prohibition applies to any person carrying on regulated activities for reward or in the course of business, regardless of whether they hold themselves out using official titles like “subsidiary intermediary.” Takeaway: Giving opinions on material decisions—such as the timing and amount of MPF benefit withdrawals—for reward or in a business capacity requires registration as an intermediary, as the statutory exception for public media does not apply to subscription-only services.

Correct: Statements I, II, and IV are correct according to the MPFA Guidelines. Statement I reflects the requirement in III.35 that intermediaries must disclose if their compensation varies based on the client’s selection. Statement II aligns with III.39, which mandates that intermediaries explain the default fund arrangement and its features if no selection is made. Statement IV correctly identifies the seven-year record-keeping requirement for disclosure documents as specified in III.36.

**Incorrect:** Statement III is incorrect because Guideline III.41(a) and (b) require intermediaries to make “like with like” comparisons. This means a constituent fund’s performance should be compared with other funds of the same type, risk level, and investment strategy, rather than funds of different types.

**Takeaway:** Registered intermediaries are bound by conduct requirements to ensure transparency in their benefit structures, provide essential information regarding default investment options, and maintain rigorous standards for performance comparisons and record retention. Therefore, statements I, II and IV are correct.

Correct: Statements I, II, and IV are accurate according to the MPFSO guidelines. For postal payments, the contribution is deemed paid on the date the cheque would normally be delivered. For self-employed persons (SEPs) using direct debit without a remittance statement, the payment date is when the trustee issues the debit instruction. Furthermore, remittance statements submitted via electronic means like fax are considered received on the date of transmission.

**Incorrect:** Statement III is incorrect because for direct credit payments, the contribution is only considered paid on the date the MPF scheme’s bank account is credited, not the date the employer’s bank account is debited. Employers must ensure funds arrive in the scheme’s account on or before the contribution day to avoid penalties.

**Takeaway:** Different payment methods have different regulatory ‘deemed’ payment dates; specifically, direct credit depends on the receipt of funds in the scheme’s account, while postal and electronic submissions rely on delivery norms or transmission dates. Therefore, statements I, II and IV are correct.

Correct: Statements II, III, and IV are correct. To ensure the security and timely processing of funds, the MPFA and trustees recommend that employers make payments directly to the trustee or through their designated bank branches and customer service counters. Failure to remit mandatory contributions by the contribution day results in a contribution surcharge (typically 5% of the outstanding amount). Furthermore, the law provides for financial penalties and criminal prosecution as deterrents against non-compliance.

**Incorrect:** Statement I is incorrect because both cash payments and payments made through MPF intermediaries should be avoided. Using intermediaries or cash increases the risk of delayed processing, loss, or misappropriation of funds. The regulatory preference is for direct, traceable payment methods to the scheme trustee.

**Takeaway:** Employers must adhere to specific payment channels and strict deadlines for MPF contributions; failure to do so triggers immediate financial surcharges and potential legal consequences including prosecution. Therefore, statements II, III and IV are correct.

Correct: Under the Mandatory Provident Fund Schemes Ordinance, ‘relevant income’ is defined broadly to include all monetary payments made by an employer to an employee arising from their employment. This includes basic wages, salaries, commissions, performance-based bonuses, and various cash allowances (such as transportation or housing allowances). Because the performance-based commission, the cash transportation allowance, and the discretionary bonus are all monetary rewards or allowances related to employment, they must be included in the calculation of relevant income for MPF contribution purposes. Therefore, the items that must be included are I, III, and IV only.

**Incorrect:** Statutory severance payments and long service payments made in accordance with the Employment Ordinance are specifically excluded from the definition of relevant income. These payments are intended to compensate an employee for the loss of their job rather than representing earnings from active employment. Consequently, any combination that includes item II is incorrect, and any combination that omits items I, III, or IV is incomplete because all three are standard components of relevant income.

**Takeaway:** For MPF purposes, relevant income encompasses almost all forms of monetary remuneration, including bonuses and allowances, but explicitly excludes statutory severance and long service payments.

Correct: Under the Employee Choice Arrangement (ECA), scheme members are permitted to transfer accrued benefits derived from their own mandatory contributions made during their current employment to an MPF scheme of their choice at least once per calendar year. A fundamental regulatory safeguard is that trustees are prohibited from charging any administrative fees or financial penalties for the transfer of accrued benefits; the only allowable deductions are necessary transaction costs (such as brokerage fees or bid-spreads) that are paid to third parties to facilitate the buying and selling of fund units.

**Incorrect:** It is a misconception that the Employee Choice Arrangement allows for the transfer of the employer’s portion of mandatory contributions while the employee is still in that employment; it only applies to the employee’s portion. Furthermore, the suggestion that trustees can charge redemption fees, exit fees, or administrative overhead charges is incorrect, as the law specifically protects members from such costs to ensure the portability of benefits. There are also no statutory requirements for a minimum length of service or a minimum account balance to qualify for a transfer under the ECA.

**Takeaway:** MPF regulations ensure the portability of benefits by allowing employees to move their own mandatory contributions annually under the ECA, while strictly forbidding trustees from imposing any administrative fees or penalties on the transfer process itself.

Correct: All four statements accurately reflect the considerations and regulatory requirements surrounding the transfer of MPF accrued benefits. Statement I identifies the market fluctuation risk (the ‘out-of-market’ period) where benefits are cashed out and not yet reinvested. Statement II correctly describes the forward pricing mechanism used in MPF funds, which prevents trading at a specific price. Statement III highlights the risk associated with guaranteed funds, where specific conditions must be met to receive the guarantee. Statement IV correctly states the 30-day processing obligation of the original (transferor) trustee under standard circumstances.

**Incorrect:** There are no incorrect statements provided in this set. Each statement aligns with the MPFA’s guidelines for members making a transfer election and the statutory duties imposed on trustees to ensure timely processing and disclosure of risks.

**Takeaway:** When transferring MPF benefits, members must look beyond just fees and fund performance; they must also account for the ‘sell low, buy high’ risk during the transfer lag, the implications of forward pricing, and the potential loss of specific fund features like guarantees. Therefore, I, II, III & IV is correct.

Correct: According to the MPFA Guidelines on Conduct, when a registered intermediary makes a comparison of investment performance, they must ensure a “like with like” comparison. This involves comparing constituent funds of the same type (e.g., equity fund to equity fund) over a long-term period, which is defined as at least five years where practicable. Furthermore, the comparison should be based on net performance (after fees and charges) rather than gross performance to ensure the client receives a realistic representation of potential outcomes.

Correct: Under the Mandatory Provident Fund Schemes Ordinance (MPFSO), the Mandatory Provident Fund Schemes Authority (MPFA) must follow specific procedural fairness requirements before imposing disciplinary sanctions. This includes providing the regulated person with a written notice that outlines the preliminary view, the reasons for it, the proposed order, and the right to make representations. The intermediary is entitled to provide these representations either orally or in writing. If a final decision is made, the intermediary has the right to appeal to the Mandatory Provident Fund Schemes Appeal Board, which is an independent body, within two months of the notice of the decision.

**Incorrect:** The suggestion that an intermediary is limited to written representations is incorrect because the MPFSO explicitly allows for oral representations as well. The claim that the Frontline Regulator (FR) is the sanctioning authority is false; while FRs conduct investigations, the MPFA is the sole authority empowered to impose disciplinary sanctions. Furthermore, the statutory period for lodging an appeal to the Appeal Board is two months, making any reference to 14 days, 30 days, or six months inaccurate. Finally, the decision-making process is not final at the MPFA level, as an independent appeal mechanism exists.

**Takeaway:** Procedural fairness in the MPF regulatory framework ensures that intermediaries are given a preliminary notice and the opportunity to be heard (orally or in writing) before sanctions are finalized, with a two-month window to appeal decisions to an independent Appeal Board.

Correct: The Net Asset Value (NAV) per unit is the standard measure used to determine the price at which scheme members buy or sell units in an MPF constituent fund. To calculate this, the fund manager must first determine the total market value of all underlying investments (such as stocks or bonds) and add any cash holdings. From this gross asset value, all liabilities—specifically administrative and management fees that have been accrued but not yet paid—must be deducted. This net amount is then divided by the total number of units currently issued to arrive at the NAV per unit.

**Incorrect:** It is incorrect to suggest that management fees are only deducted from individual member accounts or processed only at the end of a financial year, as these expenses must be reflected in the daily valuation of the fund’s assets. Additionally, using the historical purchase cost of investments is improper because the NAV must reflect the current market value to ensure that transactions are fair for both entering and exiting members.

**Takeaway:** The NAV per unit of an MPF fund is calculated by subtracting accrued expenses from the sum of the market value of investments and cash, then dividing that net figure by the total units issued.

Correct: According to the MPFA Guidelines, when a registered intermediary advises a client on transferring benefits under the Employee Choice Arrangement (ECA), they must provide and explain the ‘Guide to Transfer Benefits under Employee Choice Arrangement’. If the transfer involves moving out of a guaranteed fund, the intermediary has a specific duty to warn the client that they may lose the guarantee. This warning must be documented, and the intermediary must obtain a signed acknowledgement from the client confirming their understanding of these consequences. Additionally, the intermediary must explain the ‘out-of-market’ risk, which is the time lag during the transfer process when the accrued benefits are not invested.

**Incorrect:** Predicting or projecting the future performance of a constituent fund is explicitly prohibited, as intermediaries should avoid forecasting likely returns. Simply providing a website link or referring the client to the MPFA for the transfer guide is insufficient, as the intermediary is required to provide and explain the guide personally. While comparing fees is a requirement, it does not replace the mandatory procedural steps and documentation required when a client exits a guaranteed fund.

**Takeaway:** When facilitating an MPF transfer, especially one involving the Employee Choice Arrangement or a guaranteed fund, intermediaries must ensure full disclosure of the transfer process risks and maintain signed documentation of the client’s acknowledgement of potential guarantee losses.

Correct: Under the Mandatory Provident Fund Schemes (Exemption) Regulation, a member’s “minimum MPF benefits” (MMB) are protected by law. Even if a member is dismissed for cause, such as serious misconduct, the trustee is strictly prohibited from forfeiting the portion of the benefits defined as the MMB. This ensures that the statutory minimum level of retirement savings is preserved for the employee regardless of the circumstances of their departure.

**Incorrect:** While an ORSO scheme’s governing rules might allow for the forfeiture of benefits that exceed the MMB in cases of dismissal for cause, they cannot touch the MMB itself. Additionally, the calculation of MMB is not based on uncapped salary; it is subject to a statutory monthly income cap (currently $30,000). Furthermore, MMB cannot be paid out as a cash lump sum simply because an employee leaves a job; it must be preserved until the member reaches age 65 or meets other specific statutory criteria, or otherwise be transferred to an MPF scheme.

**Takeaway:** For new members of MPF Exempted ORSO Registered Schemes, the “minimum MPF benefits” are subject to preservation, portability, and withdrawal requirements similar to MPF schemes, and they are legally protected from forfeiture even in cases of dismissal for cause.

Correct: In the context of the Mandatory Provident Fund (MPF) system, the distinction between a soft and hard guarantee lies in the presence of qualifying conditions. A soft guarantee is conditional, meaning the member must satisfy specific requirements—such as maintaining the investment for a minimum number of years or reaching a specific retirement age—to be eligible for the guaranteed return or capital preservation. Conversely, a hard guarantee is unconditional and applies regardless of the member’s specific circumstances or holding period.

**Incorrect:** It is incorrect to suggest that the MPFA provides the guarantee; guarantees are typically provided by an insurer or a third-party guarantor as specified in the fund’s offering documents. The distinction between soft and hard guarantees is not based on whether they protect principal versus a specific rate of return, as both types can offer either capital or return guarantees. Furthermore, the type of guarantee (soft or hard) is a feature of the fund’s design and is not restricted by the type of scheme, such as Industry Schemes or Master Trust Schemes.

**Takeaway:** MPF members should carefully review the Fund Fact Sheet and marketing materials of guaranteed funds to identify whether a guarantee is ‘soft’ or ‘hard,’ as the former requires meeting specific criteria (often based on a ‘career average’ or minimum investment period) to benefit from the protection.

Correct: Statements I, II, and IV are accurate. Within the World Bank’s five-pillar framework, the MPF System is classified as Pillar Two, which is defined as a mandatory, privately-managed, and fully-funded contribution system. A key feature of the MPF System is that mandatory contributions are fully and immediately vested in the scheme member upon payment. Furthermore, Pillar Four correctly identifies informal support (such as family) and individual assets (such as home ownership) as part of the broader retirement protection landscape.

**Incorrect:** Statement III is incorrect because the MPF System is a “defined contribution” system, not a “defined benefit” system. In a defined contribution scheme, the accrued benefits depend on the amount of contributions made and the investment returns generated, rather than a pre-determined amount or a government guarantee based on years of service.

**Takeaway:** The MPF System is an employment-based, defined contribution pillar that relies on private management and full funding, forming just one part of a multi-layered retirement protection strategy where no single pillar is intended to meet all retirement needs. Therefore, statements I, II and IV are correct.

Correct: The Guidelines on Conduct Requirements for Registered Intermediaries establish a comprehensive framework for professional behavior. These requirements explicitly include the duty to act honestly, fairly, and in the best interests of the client (integrity), the obligation to disclose any potential or actual conflicts of interest, the necessity of providing clients with all relevant information to facilitate informed decision-making, and the requirement to perform duties with a professional level of care, skill, and diligence. Therefore, all four listed principles are mandatory conduct requirements.

**Incorrect:** Any selection that omits one or more of these components is incomplete. For example, acting with integrity and diligence is insufficient if the intermediary fails to disclose a conflict of interest or withholds necessary information from the client. The regulatory framework treats these duties as concurrent obligations rather than optional or mutually exclusive standards, meaning a registered intermediary must satisfy all of them simultaneously.

**Takeaway:** To ensure the protection of scheme members, the MPFA mandates that registered intermediaries adhere to a holistic set of conduct standards encompassing honesty, transparency, and professional competence. All four elements—integrity, conflict disclosure, information provision, and professional diligence—are essential pillars of these guidelines.

Correct: Under the Mandatory Provident Fund Schemes (General) Regulation, if a self-employed person is unable to produce evidence of their relevant income (such as a Notice of Assessment) and the trustee is satisfied with the reason for this inability, the relevant income for contribution purposes is deemed to be the basic allowance as defined under section 28 of the Inland Revenue Ordinance, provided the person claims to earn less than the maximum relevant income level.

**Incorrect:** The maximum relevant income level of $360,000 per year is only applied as a default if the trustee is not satisfied with the reason why the self-employed person cannot produce evidence. The minimum relevant income level of $85,200 is the threshold for making contributions but is not the specific fallback figure used when documentation is missing. There is no regulatory provision that allows a self-employed person to be exempt from contributions solely due to a lack of tax documentation; they must still fulfill their obligations based on the statutory fallback amounts.

**Takeaway:** For self-employed persons who cannot provide a Notice of Assessment but offer a satisfactory explanation to the trustee, the relevant income is determined by the basic allowance under the Inland Revenue Ordinance.

Correct: Statements I, II, and IV accurately reflect the regulatory requirements under the MPF Guidelines. Statement I is correct because the processing of a client’s instruction does not need to be delayed pending the completion of the post-sale call. Statement II is correct as it describes the permissible arrangement when a principal intermediary lacks its own audio recording facilities. Statement IV is correct because suitability assessments are specifically triggered when an invitation or advice regarding a particular constituent fund is directed at a specific client, such as an individual employee.

**Incorrect:** Statement III is incorrect because the mandatory retention period for audio records and written documentation related to post-sale calls and contact attempts is a minimum of seven years, not five years. This requirement ensures that frontline regulators have access to historical compliance data during inspections or investigations.

**Takeaway:** MPF intermediaries must balance operational efficiency with regulatory compliance by ensuring that instruction processing continues while maintaining rigorous seven-year record-keeping standards and performing suitability checks during individualized client engagements. Therefore, statements I, II and IV are correct.

Correct: Statement I is accurate because the Fund Expense Ratio (FER) is intended to show the total cost of a fund; therefore, if a constituent fund invests in one or more Approved Pooled Investment Funds (APIFs), the fees at the APIF level must be aggregated into the FER. Statement III is correct as the Mandatory Provident Fund Schemes Authority (MPFA) actively monitors fund performance and reviews breach reports to ensure that trustees rectify issues and compensate affected funds. Statement IV is correct because the regulatory framework recognizes that a fund needs a sufficient track record to produce a meaningful FER, thus exempting funds with less than two years of history from this disclosure.

**Incorrect:** Statement II is incorrect because the Disclosure Code and MPF regulations require the Annual Benefit Statement (ABS) to be issued within three months after the end of the scheme’s financial period. A four-month window exceeds the permitted statutory timeframe for providing members with their historical account records.

**Takeaway:** MPF disclosure requirements emphasize transparency through the FER (which must include underlying APIF costs) and timeliness through the ABS (issued within 3 months), all while being supported by the MPFA’s multi-faceted supervisory activities including breach assessment and performance monitoring. Therefore, statements I, III and IV are correct.

Correct: The Guidelines on Conduct Requirements for Registered Intermediaries are issued to provide practical guidance on the minimum standards expected of regulated persons. They do not have the force of law and are explicitly described as non-exhaustive. This means that even if a specific action or omission is not mentioned in the Guidelines, it can still be determined to be a breach of the performance requirements under the Mandatory Provident Fund Schemes Ordinance (MPFSO). Furthermore, these Guidelines are intended to be complementary to, rather than a replacement for, the legislative provisions and codes issued by frontline regulators like the SFC or the Insurance Authority.

**Incorrect:** It is incorrect to suggest that the Guidelines have the force of law or that they override the MPFSO; the Ordinance always takes precedence. It is also a misconception that the Guidelines provide a ‘safe harbor’ or an exhaustive list of rules; the MPFA and frontline regulators can still investigate and discipline conduct that falls outside the specific examples provided. Finally, the Guidelines do not replace the existing codes of conduct issued by industry regulators; they work alongside them to ensure a comprehensive regulatory framework.

**Takeaway:** Registered intermediaries must treat the MPFA Guidelines as a baseline for conduct that complements existing laws and industry-specific regulations, recognizing that compliance with the letter of the Guidelines does not automatically shield them from liability for other unprofessional conduct.

Correct: Under the MPFA Guidelines on Conduct for Registered Intermediaries, a person with a low level of education (primary level or below) is classified as a vulnerable client when making key decisions, such as transferring accrued benefits out of a guaranteed fund. In such cases, the intermediary must provide extra care, which includes offering the client the opportunity to be accompanied by a companion or to have an additional member of staff witness the sales and fund selection process. The intermediary is required to document that these choices were offered, record the client’s selection, obtain the client’s signature on the document, and provide them with a copy. The original record must be retained by the principal intermediary for at least seven years.

**Incorrect:** While a post-sale call is a valid alternative for providing extra care, the guidelines specify it must be conducted within seven working days, not ten. Simply providing a written summary of the risks does not meet the specific procedural requirements for supporting a vulnerable client during the decision-making process. Additionally, the mandatory retention period for records related to these transactions and the support provided is seven years, making a five-year retention period non-compliant with the regulatory standards.

**Takeaway:** When dealing with vulnerable clients making key MPF decisions, registered intermediaries must implement specific safeguards, such as offering a witness or conducting a timely, recorded post-sale call, and ensure all related documentation is preserved for seven years.

Correct: The Mandatory Provident Fund (MPF) system in Hong Kong is specifically designed as the second pillar of the World Bank’s five-pillar framework. Its defining characteristics are that it is mandatory for the relevant working population, employment-based (involving both employer and employee contributions), privately managed by approved trustees through market mechanisms, and fully funded, meaning that contributions are immediately vested in the member’s account and the ultimate benefits are based on the total accumulated contributions and investment returns.

**Incorrect:** A system that is publicly managed and non-contributory, financed by the state to provide a basic social safety net, describes Pillar Zero. Voluntary savings, such as personal insurance or private investments not mandated by law, constitute Pillar Three. A mandatory, contributory system that is publicly managed (often involving a state-run social security fund) describes Pillar One, which differs from the privately managed nature of the MPF.

**Takeaway:** Under the World Bank framework, the MPF system is a Pillar Two arrangement, characterized by being a mandatory, privately managed, and fully funded defined contribution system that complements other forms of social and personal retirement support.

Correct: According to the Guidelines on Conduct Requirements for Registered Intermediaries, a Responsible Officer (RO) is tasked with the critical duty of ensuring that the principal intermediary has established and maintains effective internal controls and procedures. These systems are designed to secure compliance by both the principal intermediary and its subsidiary intermediaries with the statutory requirements and conduct standards stipulated under Part IVA of the Mandatory Provident Fund Schemes Ordinance (MPFSO).

**Incorrect:** It is not a requirement for a Responsible Officer to personally witness or approve every individual client transaction, as their role is focused on high-level oversight and the adequacy of the compliance framework rather than micro-management of daily sales. While reporting non-compliance is necessary, the primary responsibility is the proactive maintenance of the control environment itself. Additionally, the RO’s duties pertain to regulatory conduct and compliance, not the investment performance or market returns of the MPF schemes, which are subject to market forces and the decisions of the approved trustees and investment managers.

**Takeaway:** The Responsible Officer serves as the key individual accountable for the integrity of a principal intermediary’s compliance infrastructure, ensuring that the firm and its staff operate within the legal framework of the MPFSO.

Correct: Statement I is correct as the “non-refusal” provision ensures that approved trustees cannot reject applicants who meet the statutory and scheme-specific requirements. Statement II accurately describes the Employee Choice Arrangement (ECA), which permits employees to transfer their own mandatory contributions from their current employment account to a scheme of their choice once per calendar year. Statement III is correct because, unlike voluntary contributions or ORSO schemes, all mandatory MPF contributions vest in the member immediately upon payment. Statement IV correctly identifies that mandatory contributions are capped at the maximum relevant income level of $30,000 per month, meaning any income above this amount does not increase the mandatory contribution amount.

**Incorrect:** All statements provided are factually accurate according to the Mandatory Provident Fund Schemes Ordinance. Common errors in this area include the misconception that employer mandatory contributions follow a vesting scale (which is only true for voluntary contributions) or that the ECA allows for the transfer of the employer’s portion of mandatory contributions from the current employment account (which is prohibited).

**Takeaway:** MPF regulations mandate immediate vesting of all mandatory contributions and provide employees with limited portability of their own contributions through the ECA, while capping contributions at a maximum relevant income level of $30,000. Therefore, all of the above statements are correct.

Correct: Statements I, II, III, and IV are all accurate according to the Mandatory Provident Fund Schemes Ordinance and MPFA regulations. Employers are required to notify the trustee of an employee’s departure by the 10th day of the following month (I) and provide a pay-record within 7 working days of the contribution payment (II). If a terminated employee remains silent regarding their benefits for 3 months after the trustee is notified, the law deems them to have elected a transfer to a personal account in the same scheme (III). Furthermore, administrative failure to enroll an employee does not exempt an employer from the financial obligation to remit contributions, which must then be paid to the MPFA (IV).

**Incorrect:** Common errors in this area include confusing ‘7 working days’ with ‘7 calendar days’ for pay-records, or assuming the notification deadline for cessation of employment is 30 days rather than the 10th of the following month. Additionally, some mistakenly believe that if an employee is not enrolled, no contributions are due, or that benefits are automatically cashed out if no election is made upon termination, both of which are incorrect.

**Takeaway:** Compliance with MPF regulations requires strict adherence to administrative timelines for reporting employment changes and providing records to employees, ensuring that contributions are preserved even when active employment ends or enrollment is delayed. All of the above. Therefore, all of the above statements are correct.

Correct: Under the Employee Choice Arrangement (ECA), a relevant employee is entitled to transfer the accrued benefits derived from their own mandatory contributions made during their current employment to an MPF master trust scheme of their choice. This right can be exercised once every calendar year, which is defined as the period from January 1 to December 31.

**Incorrect:** The transfer right under the ECA does not extend to the employer’s mandatory contributions, which must remain in the scheme selected by the employer until the employee ceases employment. There is no statutory requirement for a minimum duration of service, such as five years, before an employee can utilize the ECA. Furthermore, while tax-deductible voluntary contributions (TVC) are portable, they are governed by different transfer rules and are not the primary focus of the ECA’s provisions regarding current employment mandatory contributions.

**Takeaway:** The Employee Choice Arrangement provides employees with greater control over their MPF investments by allowing the annual transfer of their own mandatory contribution portion from the current employment account to a self-selected master trust scheme.

Correct: According to the MPFA Guidelines on Conduct Requirements for Registered Intermediaries (Section 34ZL(1)(d)), when a client chooses not to provide information necessary for a suitability assessment, the intermediary must explain to the client that the lack of such information will affect the intermediary’s ability to assess whether the registered scheme or constituent fund is suitable for them. The intermediary should provide a warning to the client regarding the limitations of the advice provided under these circumstances.

**Incorrect:** It is incorrect to suggest that an intermediary must immediately cease all services if a client refuses to provide certain financial details; rather, the intermediary must manage the situation through proper disclosure and warnings. Relying solely on a single factor like age is insufficient for a comprehensive suitability assessment, as the guidelines require consideration of risk tolerance and investment objectives. Furthermore, statutory conduct requirements are mandatory and cannot be waived by a client signing a disclaimer or indemnity agreement.

**Takeaway:** If a client provides limited information during the ‘Know Your Client’ process, the intermediary’s primary duty is to warn the client that the suitability of any subsequent recommendation may be compromised due to the missing data.