Mandatory Provident Fund Quiz 15

Correct: According to the Guidelines on Conduct Requirements, the processing of a client’s instruction does not need to be delayed pending the completion of the post-sale call process. If the client cannot be reached after several documented attempts, the principal intermediary is required to send a document to the client. This document must confirm that the intermediary provided the offering document, explained the key features of the scheme and constituent funds, and advised the client to read and understand the information before making their decision.

**Incorrect:** It is incorrect to suspend the processing of the instruction because the guidelines explicitly state that processing need not wait for the post-sale call to be finished. There is no regulatory requirement to report unsuccessful contact attempts to the Mandatory Provident Fund Schemes Authority (MPFA). Additionally, all records related to contact attempts, including audio recordings or written correspondence, must be retained for a minimum of seven years, not two years.

**Takeaway:** When a client is unreachable for a post-sale call, the intermediary must fulfill their disclosure obligations by sending a written confirmation to the client and must maintain all relevant records for at least seven years.

Correct: Statements I, II, and III are accurate according to MPF regulations and investment principles. To ensure the security of funds and maintain clear audit trails, the MPFA advises that contribution payments be made directly to trustees or their designated bank branches rather than through intermediaries or in cash. Timely payment is a statutory requirement; failure to comply results in a contribution surcharge (typically 5%) and potential criminal prosecution or financial penalties. Furthermore, Treasury bills are correctly described as discount instruments where the investor’s yield is the spread between the discounted purchase price and the par value at maturity.

**Incorrect:** Statement IV is incorrect because commercial paper is issued by private corporations, which inherently carries a higher default risk and lower liquidity compared to government-issued Treasury bills. Therefore, commercial paper must offer a higher interest rate (yield) to attract investors, not a lower one as suggested in the statement.

**Takeaway:** Employers must prioritize direct payment methods to trustees to ensure compliance and avoid the severe legal and financial consequences of late contributions, while investors should recognize that higher yields in money market instruments like commercial paper typically compensate for higher credit risk relative to government securities. Therefore, statements I, II and III are correct.

Correct: According to Section 34ZL of the Mandatory Provident Fund Schemes Ordinance (MPFSO), a registered intermediary must have such regard to the client’s particular circumstances as is necessary for ensuring that the regulated activity is appropriate to the client. This means that when providing advice on MPF products, the intermediary is legally required to perform a suitability assessment to ensure the recommendation aligns with the client’s specific needs, financial situation, and risk tolerance.

**Incorrect:** Providing documents without assessing suitability is insufficient, as the law requires the intermediary to ensure the activity is appropriate for the client. Prioritizing the principal intermediary’s commercial interests over the client’s interests violates the statutory requirement to act in the best interests of the client. Furthermore, the duty to disclose conflicts of interest is a proactive obligation; the intermediary must use best endeavors to avoid conflicts and disclose them when they arise, regardless of whether the client asks for such information.

**Takeaway:** Registered intermediaries have a statutory duty to ensure that any MPF-related advice is suitable for the client by taking their individual circumstances into account and acting with integrity and transparency.

Correct: Under the Employee Choice Arrangement (ECA), a relevant employee is permitted to transfer the accrued benefits derived from their own mandatory contributions made during their current employment. This transfer can be made in a lump sum to an MPF personal account of the employee’s choice once every calendar year, unless the governing rules of the original scheme allow for more frequent transfers.

**Incorrect:** The employer’s mandatory contributions attributable to the current employment are not transferable under the ECA while the employee remains in that job. Accrued benefits from former employment or self-employment held within a contribution account can be transferred at any time (not limited to once a year) and can be moved to either a personal account or another contribution account. Additionally, even if an employee exercises their transfer rights, the employer is required to continue making future contributions to the existing MPF scheme they originally selected.

**Takeaway:** The ECA enhances employee autonomy by allowing the annual transfer of the employee’s portion of current mandatory contributions to a personal account, while maintaining the stability of the employer’s portion and the existing contribution workflow.

Correct: For new members of an MPF exempted ORSO registered scheme, ‘minimum MPF benefits’ (MMB) are defined as the lesser of the benefits actually accrued during the period the exemption certificate was in effect, or a formula-based amount (1.2 × final average monthly relevant income, capped at $30,000, × years of post-MPF service). These benefits are subject to strict preservation requirements and must generally be transferred to an MPF scheme upon a change of employment. Furthermore, the Mandatory Provident Fund Schemes (Exemption) Regulation stipulates that MMB cannot be forfeited by the trustee, even in cases where an employee is dismissed for cause, such as serious misconduct.

**Incorrect:** It is incorrect to suggest that MMB is the ‘greater’ of the two values, as the regulation uses the ‘lesser’ to establish the protected minimum level. The claim that MMB can be forfeited for serious misconduct is also false, as these benefits are specifically protected from forfeiture under the Exemption Regulation, unlike other ORSO benefits which might be subject to vesting scales or forfeiture clauses. Additionally, MMB cannot be withdrawn as a cash lump sum simply upon resignation; they must be preserved until the member reaches age 65 or meets other statutory criteria. Finally, the formula for MMB includes a statutory cap on monthly relevant income (currently $30,000), making any calculation without such a cap legally inaccurate.

**Takeaway:** New members of MPF exempted ORSO registered schemes must have their ‘minimum MPF benefits’ preserved and transferred to an MPF scheme upon leaving employment; these benefits are calculated using a specific ‘lesser of’ formula and are strictly non-forfeitable regardless of the reason for termination.

Correct: Statements I, II, and IV accurately reflect the regulatory requirements for self-employed persons (SEPs) under the MPF system. SEPs must join a scheme within a 60-day permitted period, which is subject to extension if the deadline falls on a Saturday or public holiday. If a business suffers a net loss, the SEP can lodge a statement to discontinue mandatory contributions until income recovers. Furthermore, upon ceasing self-employment, the SEP is required to notify the trustee and settle the final contribution by the end of that contribution period.

**Incorrect:** Statement III is incorrect because the Mandatory Provident Fund Schemes Ordinance stipulates that if an SEP fails to produce evidence of relevant income and the trustee is not satisfied with the reason for this failure, the relevant income is deemed to be the maximum level (currently $360,000 per year), rather than the minimum level. This serves as a default measure to ensure contributions are not underpaid in the absence of transparency.

**Takeaway:** Self-employed persons are responsible for self-reporting and providing evidence of income; failure to provide satisfactory evidence of earnings to a trustee results in the assessment of mandatory contributions based on the statutory maximum relevant income level. Therefore, statements I, II and IV are correct.

Correct: Under the Mandatory Provident Fund Schemes Ordinance, both principal and subsidiary intermediaries are subject to strict reporting requirements regarding changes to their registered information. Specifically, a subsidiary intermediary must provide written notice to the MPFA within 7 working days of any change in their name, address, or contact details. This ensures the regulatory authority maintains an accurate register of all individuals authorized to engage in regulated MPF activities.

**Incorrect:** Waiting to report the change until the submission of the annual return is incorrect because the law requires immediate notification within a specific window following the event. A 30-day notification period is incorrect as the statutory timeframe for MPF intermediaries is shorter, specifically 7 working days. While a principal intermediary is responsible for reporting its own corporate changes and the cessation of its responsible officers, the subsidiary intermediary holds the personal legal obligation to report changes to their own contact information.

**Takeaway:** Registered intermediaries must notify the MPFA of changes to their contact details or name within 7 working days to remain compliant with statutory requirements and avoid a potential fine of $50,000.

Correct: Under the Mandatory Provident Fund Schemes (General) Regulation, an MPF Conservative Fund is subject to a specific fee-charging restriction designed to protect members. Administrative expenses can only be deducted from the fund if the investment return for a given month exceeds the return that would have been earned at the prescribed savings rate (PSR), which is determined by the MPFA based on the average interest rates of the three note-issuing banks. If the actual investment return is less than the PSR, or exactly equal to it, there is no ‘excess’ return from which to draw fees, and therefore the trustee is prohibited from charging administrative expenses for that specific month.

**Incorrect:** Situations where the investment return is greater than the prescribed savings rate allow the trustee to charge administrative expenses, provided the fees do not exceed the amount of the excess return. Factors such as the net asset value decreasing due to member withdrawals or the fund’s total duration of operation are not the regulatory triggers for the prohibition of administrative fees; the restriction is strictly performance-based relative to the prescribed savings rate.

**Takeaway:** The MPF Conservative Fund’s administrative fee structure is unique because it is contingent upon the fund’s performance exceeding the prescribed savings rate, ensuring that fees do not erode the capital in periods of very low returns.

Correct: The Guidelines on Conduct Requirements for Registered Intermediaries are issued by the MPFA to provide guidance on the minimum standards of conduct expected of regulated persons. They do not have the force of law and are intended to be complementary to, rather than a replacement for, existing legislative provisions or codes issued by frontline regulators. Furthermore, they are not exhaustive, meaning that conduct not specifically described in the Guidelines can still be considered a breach of performance requirements.

**Incorrect:** The claim that the Guidelines are an exhaustive list is incorrect because the MPFA explicitly states that acts or omissions not mentioned may still constitute a breach of performance requirements. The assertion that the Guidelines replace the codes of conduct issued by frontline regulators (such as the SFC or Insurance Authority) is false, as they are designed to be complementary. Finally, the Guidelines do not remove the investigatory powers of frontline regulators; instead, these regulators use the Guidelines to assist in their supervisory and investigatory functions.

**Takeaway:** MPF intermediaries must recognize that the Guidelines serve as a non-statutory baseline for professional conduct that works in conjunction with other regulatory requirements and does not limit the scope of what may constitute a conduct breach.

Correct: Statements I, II, and III are accurate according to the administrative requirements for MPF schemes. If a benefit cheque is returned to the trustee before the six-month ‘Specified Period’ expires, the trustee is mandated to take immediate follow-up action to find the claimant. Additionally, the due diligence process for locating members requires at least three contact attempts at different times and dates within a single month. Regarding the offsetting mechanism, the Employment Ordinance and MPF regulations allow employers to offset Severance Payments (SP) or Long Service Payments (LSP) against the accrued benefits derived specifically from the employer’s contributions.

**Incorrect:** Statement IV is incorrect because the classification of benefits as ‘unclaimed’ does not change their ownership status. The accrued benefits continue to vest in the scheme member even if they are retained in the scheme as unclaimed benefits or listed on the MPFA’s Unclaimed Benefits Register, which is simply a tool for public search.

**Takeaway:** Trustees must adhere to specific contact protocols before classifying benefits as unclaimed, and while employers have the right to offset statutory payments, this right is restricted to the employer-funded portion of the member’s account and does not affect the vesting of the benefits.

I, II & III only. Therefore, statements I, II and III are correct.

Correct: Statements I, III, and IV are correct. New members of MPF Exempted ORSO Registered Schemes are subject to specific preservation, portability, and withdrawal requirements regarding their “minimum MPF benefits” (MMB). These benefits generally cannot be accessed until age 65 (or other statutory grounds like early retirement at 60) and must be transferred to an MPF scheme if the member changes employment. Furthermore, the calculation of MMB utilizes a formula where the monthly relevant income is capped at $30,000 for service periods occurring on or after 1 June 2014.

**Incorrect:** Statement II is incorrect because the Mandatory Provident Fund Schemes (Exemption) Regulation explicitly states that a trustee is prohibited from forfeiting a member’s “minimum MPF benefits” even if the member is dismissed for cause. This rule applies to both existing and new members of the scheme to protect their core retirement savings.

**Takeaway:** While ORSO schemes offer flexibility, new members joining an MPF Exempted ORSO Registered Scheme must adhere to MPF-style preservation and portability rules for the MMB portion of their benefits, ensuring these funds are protected from forfeiture and remain within the retirement system. Therefore, statements I, III and IV are correct.

Correct: Statements II, III, and IV are accurate according to the MPFSO guidelines. For direct credit, the contribution is considered paid only when the funds are actually credited to the MPF scheme’s bank account. For self-employed persons (SEPs) using direct debit (where no remittance statement is required), the payment date is the date the trustee issues the direct debit instruction. Furthermore, if a remittance statement is sent via fax, the receipt date is the date it is transmitted to the trustee.

**Incorrect:** Statement I is incorrect because when a contribution is sent by post, it is considered paid on the date the payment cheque would normally be delivered by post, rather than the date of physical receipt or stamping by the trustee. This distinction is important for calculating whether a payment was made on or before the contribution day.

**Takeaway:** Different payment methods have different regulatory triggers for determining the official payment date; employers and SEPs must account for these variations (such as postal delivery norms versus actual bank credit dates) to ensure statutory compliance. Therefore, statements II, III and IV are correct.

Correct: The Compensation Fund is specifically designed as a “last resort” protection mechanism within the MPF system. It is intended to compensate scheme members only when losses of accrued benefits occur due to misfeasance or illegal conduct by trustees or service providers. Crucially, it is only utilized after professional indemnity insurance has been exhausted and an application is made to the MPFA.

**Incorrect:** The safety net, including both professional indemnity insurance and the Compensation Fund, does not cover losses that occur in the ordinary course of business, such as market fluctuations or poor investment performance. Additionally, the levy for the fund is based on the net asset value of the scheme assets, not a flat fee per member or a deduction from monthly contributions. The fund is also not the primary source of recovery; insurance must be triggered first.

**Takeaway:** Understanding the hierarchy of the MPF safety net is vital: professional indemnity insurance covers operational risks like negligence and fraud first, while the Compensation Fund serves as a secondary, government-backed resource for specific illegal acts.

Correct: Under the Mandatory Provident Fund (MPF) system, all mandatory contributions made by both the employer and the employee, along with any investment returns derived from them, vest fully and immediately in the employee. This means the employee has legal rights to these benefits as soon as they are paid into the scheme. However, voluntary contributions made by an employer are not subject to immediate vesting by law; instead, they are governed by the specific rules of the individual MPF scheme, which often include a vesting scale based on years of service.

**Incorrect:** The suggestion that employer mandatory contributions require a minimum service period (such as two years) to vest is incorrect because the law mandates immediate vesting for all mandatory portions. The idea that the Employee Choice Arrangement (ECA) allows the transfer of employer mandatory contributions during current employment is also false; the ECA only permits the transfer of the employee’s portion of mandatory contributions from the current employment. Finally, the claim that voluntary contributions are subject to the same statutory preservation rules as mandatory contributions is inaccurate, as voluntary benefits are generally paid out according to the scheme’s governing rules rather than being strictly locked until age 65.

**Takeaway:** While mandatory MPF contributions vest immediately and are subject to strict statutory preservation, employer voluntary contributions are flexible and governed by the specific terms and vesting schedules defined in the scheme’s governing rules.

Correct: Under Section 34ZL(1)(d) of the Mandatory Provident Fund Schemes Ordinance (MPFSO), a registered intermediary is statutorily required to have such regard to the client’s particular circumstances as is necessary to ensure that the regulated activity is appropriate to the client. This means that when providing advice or making recommendations, the intermediary must consider the client’s specific financial situation, investment objectives, and risk tolerance to ensure suitability.

**Incorrect:** Prioritizing the commercial interests of the principal intermediary over the client’s goals contradicts the fundamental requirement to act in the best interests of the client and to manage conflicts of interest properly. Focusing exclusively on fee disclosure while ignoring the client’s risk profile fails to meet the suitability standard mandated by the law. Additionally, an intermediary cannot be exempt from assessing a client’s circumstances based on a client’s specific request, as the duty to ensure the activity is appropriate is a core conduct requirement that must be upheld during regulated activities.

**Takeaway:** A key conduct requirement for MPF intermediaries is the suitability obligation, which mandates that any regulated activity performed must be appropriate for the client based on a thorough consideration of their individual circumstances.

Correct: Statements I, II, and III accurately reflect the regulatory framework and operational requirements for MPF schemes. The SFC is tasked with vetting offering documents and marketing materials to ensure appropriate disclosure for the public. Furthermore, all constituent funds must be governed by Hong Kong law and denominated in Hong Kong dollars to ensure local regulatory oversight and currency consistency. For Master Trust Schemes, transparency is maintained by requiring the publication of unit prices in both English and Chinese daily newspapers at least once a month.

**Incorrect:** Statement IV is incorrect because the licensing of investment managers is a function of the Securities and Futures Commission (SFC), not the Mandatory Provident Fund Schemes Authority (MPFA). While the MPFA is responsible for the overall administration and registration of the schemes themselves, the professional licensing of the individuals and firms managing the investments falls under the SFC’s jurisdiction.

**Takeaway:** The regulation of MPF products involves a complementary relationship where the MPFA handles scheme registration and operational compliance, while the SFC focuses on product authorization, disclosure standards, and the licensing of investment managers. Therefore, statements I, II and III are correct.

Correct: Statements I, II, and III are correct. Under the Mandatory Provident Fund Schemes (General) Regulation and the MPFA Guidelines on Internal Control Report for Each Registered Scheme (Guideline II.6), an approved trustee is required to prepare an internal control report for each registered scheme for every financial year (I). This report must include an assessment of whether the trustee’s internal control objectives were achieved during that period (II). Furthermore, the trustee must engage an auditor to review the internal control report and provide an auditor’s report on it (III).

**Incorrect:** Statement IV is incorrect because the requirement to maintain an internal control system and prepare an annual internal control report is a fundamental regulatory obligation for all approved trustees. It applies to every registered scheme regardless of the number of members or the size of the scheme’s assets. There is no exemption based on membership count.

**Takeaway:** To ensure the integrity of the MPF system, the legislation requires approved trustees to implement robust internal controls, perform annual self-evaluations of these controls, and subject these evaluations to independent audit verification. Therefore, statements I, II and III are correct.

Correct: Statement I is correct because, under section 34W of the MPFSO, an individual must be a subsidiary intermediary attached to the principal intermediary to be eligible for approval as a responsible officer. Statement III is correct as section 34X(3) grants the MPFA the power to impose or amend conditions on an approval even after it has been granted. Statement IV is correct because section 34ZW(4)(a)(i) stipulates a one-year period during which an individual is ineligible for approval if their previous status as a responsible officer was revoked.

**Incorrect:** Statement II is incorrect because individuals (subsidiary intermediaries) are classified as Type B regulatees of their respective industry regulators. Type A regulatee status refers to the principal intermediary (the corporation or registered institution) itself, not the individual subsidiary intermediary.

**Takeaway:** To be approved as a responsible officer, an individual must be an attached subsidiary intermediary with a clean regulatory record regarding prior revocations within the last year, and they remain subject to conditions imposed by the MPFA at any time. I, III & IV only. Therefore, statements I, III and IV are correct.

Correct: Statements I, II, and IV accurately reflect the conduct requirements under the MPFA Guidelines VI.2 regarding suitability. Intermediaries are mandated to perform “Know Your Client” (KYC) procedures to understand a client’s investment objectives, risk tolerance, and financial situation. If a client chooses not to provide such information, the intermediary must explicitly inform the client that this limitation prevents them from performing a proper suitability assessment. Additionally, the risk profile of any recommended constituent fund must be aligned with the client’s assessed risk appetite.

**Incorrect:** Statement III is incorrect because the Guidelines specify that if an intermediary does not have sufficient information about a client, they should not make a recommendation. A mere disclaimer does not override the fundamental obligation to ensure that advice is based on a reasonable understanding of the client’s particulars. Providing a recommendation despite a lack of necessary information would likely breach the requirement to act with due care, skill, and diligence.

**Takeaway:** To comply with statutory conduct requirements, MPF intermediaries must proactively gather client information to ensure suitability; where information is withheld, the intermediary must explain the consequences to the client and avoid making unsubstantiated recommendations. Therefore, statements I, II and IV are correct.

Correct: Under the Mandatory Provident Fund Schemes (General) Regulation, constituent funds are generally prohibited from borrowing money, except in very specific circumstances designed to ensure the smooth operation of the fund. These permitted purposes are limited to enabling the payment of accrued benefits to scheme members (ensuring liquidity for withdrawals) and settling transactions related to the acquisition of securities or other authorized investments. This restriction is a safeguard to prevent funds from using leverage to increase investment risk.

**Incorrect:** Borrowing money to enhance the fund’s investment performance through financial leverage is strictly prohibited, as MPF regulations aim to protect retirement savings from the volatility associated with gearing. Furthermore, the assets of a constituent fund must be used for the benefit of the members; therefore, borrowing to provide liquidity to a scheme sponsor or to cover the sponsor’s marketing and administrative costs would violate regulatory requirements and fiduciary duties.

**Takeaway:** To protect scheme members, MPF constituent funds may only borrow money for two specific operational reasons: paying out benefits to members and settling investment purchases.

Correct: Under the Employee Choice Arrangement (ECA), scheme members are permitted to transfer the accrued benefits derived from their own mandatory contributions made during their current employment to an MPF scheme of their own choice at least once every calendar year. To protect the interests of the members, the law stipulates that no fees or financial penalties can be charged for such transfers, except for necessary transaction costs (such as those incurred in the buying and selling of investments) that are payable to a party other than the approved trustee.

**Incorrect:** It is incorrect to state that employer mandatory contributions from current employment can be transferred under the ECA; these must generally remain in the employer’s chosen scheme until the employee leaves the company. Furthermore, the suggestion that trustees can charge administrative or redemption fees is false, as the regulations strictly prohibit the imposition of fees or penalties on the member for exercising transfer rights. Finally, the right to transfer is not restricted to termination of employment; the ECA specifically allows for transfers while the employee is still working for the same employer.

**Takeaway:** The Employee Choice Arrangement provides members with the flexibility to move their own mandatory contribution portion to a preferred scheme annually, ensuring this portability is cost-free regarding trustee-imposed fees.

Correct: Statements I, II, and IV accurately reflect the statutory requirements for registration as a subsidiary intermediary under the Mandatory Provident Fund Schemes Ordinance (MPFSO). An applicant must hold the status of a Type B regulatee (such as a licensed representative or a relevant individual) while not being a Type A regulatee. The application must be paired with a principal intermediary’s application for attachment, and the applicant must not have had their Type B qualification revoked on disciplinary grounds within the preceding year.

**Incorrect:** Statement III is incorrect because the exemption from the qualifying examination for individuals previously registered as subsidiary intermediaries within the last three years is conditional. The exemption does not apply if the previous registration was revoked due to a failure to comply with continuing training (CPD) requirements. In such cases, the applicant must retake and pass the qualifying examination.

**Takeaway:** To be registered as an MPF subsidiary intermediary, an individual must satisfy specific ‘Type B’ regulatory criteria, be formally attached to a principal intermediary, and meet examination requirements unless they qualify for a specific exemption that excludes prior CPD non-compliance. Therefore, statements I, II and IV are correct.

Correct: Statements I, II, and III are accurate reflections of the regulatory requirements for MPF funds. An MPF Conservative Fund is subject to a fee-capping mechanism where administrative expenses can only be deducted if the fund’s monthly investment return exceeds the prescribed savings rate declared by the MPFA. Additionally, these funds must be 100% invested in Hong Kong dollar assets to minimize currency risk. For Guaranteed Funds, a “soft” guarantee is the most common type, where the guarantee is conditional upon the member meeting specific “qualifying events” such as reaching the retirement age of 65 or total incapacity.

**Incorrect:** Statement IV is incorrect because MPF Conservative Funds are strictly prohibited from investing in equities or commodities. Their investment mandate is restricted to short-term bank deposits and high-quality short-term debt securities to maintain a low-risk profile. Furthermore, it should be noted that if a member redeems a guaranteed fund before a qualifying event occurs, they may receive the actual investment return, which could be lower than the guaranteed amount.

**Takeaway:** MPF Conservative Funds and Guaranteed Funds serve as conservative investment options but have different structures; the former relies on strict asset restrictions and a performance-linked fee deduction rule, while the latter provides capital or return security based on either unconditional (hard) or conditional (soft) guarantees. Therefore, statements I, II and III are correct.

Correct: Under the principles of trust law and the specific regulations governing the MPF system, a trustee occupies a fiduciary role, requiring them to act with a high degree of diligence and exclusively in the interest of the scheme members (the beneficiaries). If a trustee commits a breach of trust—which includes administrative errors or mismanagement that leads to a reduction in scheme assets—they are personally liable to restore the property or provide compensation. Crucially, the trustee is prohibited from using the scheme’s own assets to indemnify themselves for losses caused by their own mistakes or failures.

**Incorrect:** It is incorrect to suggest that a trustee can use the scheme’s reserve funds or adjust unit prices to cover a loss caused by their own error, as this would effectively make the beneficiaries pay for the trustee’s mistake, violating the trustee’s fiduciary duty. Additionally, the notion that liability only applies to intentional misconduct is false; trustees are held to a high standard of care, and even unintentional negligence or administrative oversights that result in financial loss require the trustee to make the fund whole using their own resources.

**Takeaway:** A key feature of the MPF trust arrangement is the separation of legal and beneficial ownership, ensuring that the trustee remains personally accountable for any depletion of assets resulting from a breach of duty, thereby protecting the retirement savings of the beneficiaries.

Correct: Statements I, II, and III are correct. Under the Mandatory Provident Fund Schemes Ordinance (MPFSO), the MPFA must follow a specific disciplinary process which includes providing a written notice of its preliminary view and the proposed order (Statement I). The regulated person must be granted the opportunity to make representations, which can be submitted either orally or in writing (Statement II). If the intermediary wishes to challenge the decision, they must lodge an appeal with the Mandatory Provident Fund Schemes Appeal Board within a statutory period of two months from the date of the notice (Statement III).

**Incorrect:** Statement IV is incorrect because the MPFA’s power to disclose disciplinary decisions to the public specifically excludes private reprimands. While the MPFA uses press releases to inform the public about disciplinary actions and maintains a record in the Register of Intermediaries for five years, private reprimands are intended to remain confidential and are not subject to the same public disclosure requirements as other sanctions.

**Takeaway:** The disciplinary framework for MPF intermediaries ensures procedural fairness through mandatory preliminary notices and the right to representation, while providing a clear two-month window for independent appeals to the Appeal Board. Therefore, statements I, II and III are correct.

Correct: Statements I, II, and III accurately reflect the regulatory framework governing MPF portability and disclosure. The Employee Choice Arrangement (ECA) specifically allows members to transfer accrued benefits derived from their own mandatory contributions to a personal account in a scheme of their choice once per calendar year. Furthermore, to protect member interests, trustees are prohibited from charging fees for transfers, except for out-of-pocket transaction costs paid to third parties. The Code on Disclosure also mandates that Fund Fact Sheets be issued at least twice a year, providing essential qualitative data such as market reviews and outlooks.

**Incorrect:** Statement IV is incorrect because the Code on Disclosure for MPF Investment Funds provides specific exemptions for the On-going Cost Illustration (OCI). While the OCI is a standard requirement for most funds to show dollar-term costs, it is not required for MPF Conservative Funds, certain guaranteed funds, or newly launched funds. MPF Conservative Funds are instead required to provide a separate illustrative example.

**Takeaway:** MPF regulations facilitate member autonomy through the Employee Choice Arrangement and strict fee controls on transfers, while ensuring transparency through standardized disclosure documents like the Fund Fact Sheet, subject to specific exemptions for certain fund categories. Therefore, statements I, II and III are correct.