Mandatory Provident Fund Quiz 23

Correct: Statement I is accurate as the Employee Choice Arrangement (ECA) permits employees to transfer accrued benefits derived from their own mandatory contributions from their current employment to an MPF scheme of their choice once per calendar year. Statement II correctly reflects the regulatory requirement that no fees or financial penalties can be imposed for the transfer of accrued benefits, except for necessary transaction costs incurred in buying or selling investments that are payable to a party other than the trustee. Statement III is correct because the Code on Disclosure for MPF Investment Funds requires trustees to issue at least two fund fact sheets per financial year, with specific timing requirements for distribution to members.

**Incorrect:** Statement IV is incorrect because while the On-going Cost Illustration (OCI) is a standard disclosure requirement, the Code on Disclosure specifically exempts MPF Conservative Funds, certain guaranteed funds, and newly launched funds from providing an OCI. For MPF Conservative Funds, a separate illustrative example is required instead of the OCI.

**Takeaway:** MPF scheme members enjoy significant flexibility in switching funds and schemes without administrative penalties, supported by a robust disclosure regime that mandates the periodic distribution of Fund Fact Sheets and clear fee transparency, though specific disclosure tools like the OCI have exemptions for certain fund types. Therefore, statements I, II and III are correct.

Correct: Under the tax regulations governing the Mandatory Provident Fund (MPF) system, employers are entitled to tax deductions for the contributions they make on behalf of their employees. This deduction applies to the sum of both mandatory and voluntary contributions, provided the total amount does not exceed 15% of the employees’ total annual emoluments. This provision incentivizes employers to contribute beyond the legal minimum while setting a clear fiscal limit for the government.

**Incorrect:** Employee mandatory contributions are not unlimited; they are subject to a statutory cap for tax deduction purposes, which has been set at $18,000 per year of assessment since 2015/16. Regarding administrative defaults, the approved trustee must report a failure to pay contributions to the MPFA within 10 days after the contribution day, rather than waiting until the end of the month or a 30-day period. Furthermore, the contribution surcharge imposed by the MPFA on arrears is a fixed flat rate of 5%, not a progressive or variable rate based on the duration of the delay.

**Takeaway:** Employers should be aware that their total MPF contribution tax deductibility is capped at 15% of employee emoluments, and trustees operate under a strict 10-day reporting window for any contribution defaults.

Correct: Statements II, III, and IV are accurate according to the MPF Guidelines. Intermediaries must provide comprehensive fee disclosures, including the Fund Expense Ratio (FER) and ongoing cost illustrations, to ensure clients understand the long-term impact of charges. Any material conflict of interest, such as receiving a commission or benefit from a sale, must be disclosed to the client to maintain fair treatment. Additionally, all records of regulated advice, including the rationale and client acknowledgement, must be retained for a minimum of seven years.

**Incorrect:** Statement I is incorrect because registered intermediaries are strictly prohibited from receiving cash payments from clients. Furthermore, any cheques received must be crossed and made payable only to the approved trustee of the registered scheme or the scheme itself, not to the principal intermediary or the individual intermediary.

**Takeaway:** MPF intermediaries must adhere to strict conduct requirements regarding the transparency of fees, the disclosure of potential conflicts of interest, and the secure handling of client assets, while maintaining a robust seven-year audit trail for all regulated activities. Therefore, statements II, III and IV are correct.

Correct: According to the Mandatory Provident Fund Schemes Ordinance (MPFSO), if an individual carries on regulated activities for another person in the capacity of an employee or agent without the necessary registration, they commit a serious offence. Upon conviction on indictment, the maximum penalty is a fine of $1,000,000 and imprisonment for 2 years. If the offence is a continuing one, an additional fine of $20,000 for each day the offence continues may be applied.

**Incorrect:** The penalty involving a $100,000 fine and 6 months of imprisonment, along with a $2,000 daily fine, is the maximum sentence for a summary conviction, not a conviction on indictment. A fine of $100,000 with a $2,000 daily fine but no imprisonment is the penalty specifically designated for the unauthorized use of protected titles (such as ‘principal intermediary’). Other combinations of fines and jail time are not consistent with the statutory requirements for this specific contravention under the MPFSO.

**Takeaway:** The MPFSO imposes heavy sanctions for conducting regulated activities without registration, with the severity of the penalty increasing significantly when the case is prosecuted on indictment compared to summary proceedings.

Correct: Statement I is relevant income as it constitutes a commission, which is explicitly included in the definition of relevant income regardless of whether it is calculated based on the amount or the number of transactions. Statement II is also classified as relevant income because it represents a cash payment made by the employer for the benefit of the employee (specifically for the registration of a vehicle owned by the employee), which distinguishes it from a non-monetary benefit.

**Incorrect:** Statement III is incorrect because severance payments and long service payments are specifically excluded by law from the definition of “relevant income” for MPF purposes. Statement IV is incorrect because non-monetary benefits, such as holiday packages, vouchers, or the free use of company-owned assets, do not constitute relevant income.

**Takeaway:** Under the Mandatory Provident Fund Schemes Ordinance, “relevant income” generally includes all monetary payments such as wages, commissions, and cash allowances, but excludes non-monetary benefits and specific statutory payments like severance or long service pay. Therefore, statements I and II are correct.

Correct: Statements I, II, and IV accurately reflect the regulatory and operational framework of MPF constituent funds. Guarantors of guaranteed funds are permitted to retain investment earnings to either take as profit or to buffer the fund against periods of under-performance. Additionally, a reserve charge (or guarantee fee) is a standard deduction from fund assets used to maintain the necessary provisions for the guarantee. Regarding bond funds, credit ratings serve as a primary indicator of the underlying securities’ risk levels, where higher ratings denote a lower probability of default.

**Incorrect:** Statement III is incorrect because the relationship between bond maturity and interest rate risk is positive, not negative. Long-term bonds (those with 10 years or more to maturity) are significantly more susceptible to price fluctuations resulting from interest rate movements compared to short-term bonds. Consequently, they usually offer higher yields to compensate for this increased volatility.

**Takeaway:** Intermediaries must distinguish between the specific risks of guaranteed funds (such as guarantor default risk) and bond funds (such as interest rate sensitivity and credit risk) when assisting scheme members with asset allocation. Therefore, statements I, II and IV are correct.

Correct: According to the Mandatory Provident Fund Schemes Ordinance, all mandatory contributions made by both the employer and the employee, along with any investment income or profits derived from them, are vested fully and immediately in the employee as accrued benefits. This means the employee has immediate legal rights to these funds once they are paid to the trustee. In contrast, while an employee’s own voluntary contributions also vest immediately, the vesting of voluntary contributions made by an employer is governed by the specific rules of the MPF scheme, which may include a vesting scale based on years of service.

**Incorrect:** It is incorrect to suggest that mandatory contributions require a minimum period of service before they vest, as the law requires immediate vesting regardless of employment duration. The notion that an employer can claw back mandatory contributions if an employee leaves after a short period is also false. Furthermore, there is a distinction between vesting and preservation; while the employee owns the mandatory benefits immediately (vesting), they generally cannot withdraw them until age 65 (preservation).

**Takeaway:** Mandatory contributions and their investment returns are always fully and immediately vested in the scheme member, whereas the vesting of employer voluntary contributions is determined by the governing rules of the specific MPF scheme.

Correct: According to the Guidelines on Conduct Requirements for Registered Intermediaries (Section 34ZL(1)(d)), when a client insists on selecting a constituent fund that is not suitable for them based on their assessed risk profile, the intermediary must explain the mismatch and the risks involved. The intermediary is required to provide a clear warning to the client that the chosen fund may not be suitable and must ensure that this warning, along with the client’s final decision to proceed, is properly documented in the records of the regulated activity.

**Incorrect:** It is incorrect to suggest that an intermediary should simply refuse the transaction, as scheme members ultimately have the right to make their own investment decisions provided they are informed of the risks. Conversely, proceeding without any additional disclosure or warning would violate the suitability requirements, as the intermediary has a duty to ensure the client understands how the choice deviates from their risk profile. While internal controls are important, there is no specific regulatory requirement under these guidelines that mandates seeking formal approval from a Responsible Officer for every individual instance of risk mismatch; the focus is on the disclosure and documentation process with the client.

**Takeaway:** In cases where a client’s investment preference conflicts with their assessed risk tolerance, the intermediary must fulfill their duty of care by providing a risk mismatch warning and maintaining a detailed record of the advice given and the client’s acknowledgement.

Correct: Statements I, III, and IV are correct. Under the Mandatory Provident Fund Schemes Ordinance, if a contribution day falls on a Saturday, a public holiday, or a day with a gale or black rainstorm warning (as defined by the Interpretation and General Clauses Ordinance), the deadline is extended to the next following day that is not one of those days. For self-employed persons, the contribution day is defined as the last day of the chosen contribution period (monthly or yearly).

**Incorrect:** Statement II is incorrect because the 60-day “permitted period” for enrolling a new employee is a fixed statutory limit. Unlike the contribution day, the permitted period ends exactly on the 60th day of employment, even if that day happens to be a Saturday, a public holiday, or a day with a severe weather warning.

**Takeaway:** It is vital to distinguish between the enrollment deadline and the payment deadline; while the contribution day (payment) allows for extensions due to holidays or bad weather, the permitted period (enrollment) remains fixed at 60 days regardless of the calendar day it falls on. Therefore, statements I, III and IV are correct.

In the catering and construction industries, workers hired on a day-to-day basis or for a fixed period of less than 60 days are classified as “casual employees.” For these individuals, the standard 60-day employment rule does not apply, meaning they must be enrolled in an MPF scheme from their first day of employment to ensure they are covered despite the high labor mobility of these sectors. While the 60-day rule is the general threshold for most regular employees in Hong Kong, it is specifically waived for casual workers in the two designated industries. Additionally, while Industry Schemes are specifically designed to handle the administrative needs of daily-wage earners, it is not mandatory for an employer in these sectors to use an Industry Scheme; they may opt to use a Master Trust Scheme instead. The method of wage payment, whether cash or bank transfer, does not exempt an employer from their statutory MPF obligations.

**Takeaway:** The 60-day employment rule is waived for casual employees in the construction and catering industries, requiring MPF enrollment and contributions from the very first day of work.

Correct: The regulatory framework for MPF products involves a clear division of labor between two main bodies. The MPFA is responsible for the overall administration of the MPF System, which includes the registration of MPF schemes and the approval of constituent funds and pooled investment funds based on the MPF Ordinance. Meanwhile, the SFC is responsible for authorizing these products, vetting the disclosure of information in offering documents and marketing materials, and licensing the investment managers to ensure they meet the required professional standards.

**Incorrect:** It is incorrect to state that the SFC registers MPF schemes, as registration is a statutory function of the MPFA. Similarly, the MPFA does not license investment managers; this is a core function of the SFC under the Securities and Futures Ordinance. Furthermore, the SFC, not the MPFA, is the body that issues and enforces Advertising Guidelines for documents issued to the public regarding master trust and industry schemes.

**Takeaway:** The MPFA and SFC operate under a complementary regulatory model where the MPFA focuses on the structural registration and operational compliance of the schemes, while the SFC focuses on investor protection through disclosure vetting and the oversight of investment managers.

Correct: Statement I is accurate because the Fund Expense Ratio (FER) is intended to be a comprehensive measure of costs; if a constituent fund invests in one or more Approved Pooled Investment Funds (APIFs), the fees at the APIF level must be included in the calculation. Statement II correctly identifies that the Annual Benefit Statement (ABS) must be issued to members within three months of the scheme’s financial year-end. Statement III is a standard supervisory activity performed by the MPFA to ensure that trustees and investment managers maintain robust governance and control frameworks.

**Incorrect:** Statement IV is incorrect because the disclosure of an FER is not mandatory for funds that have been in operation for less than two years. This is because expense data for very new funds may not provide a stable or representative reflection of the fund’s ongoing costs.

**Takeaway:** MPF regulatory requirements ensure transparency through standardized reporting like the FER and ABS, while the MPFA maintains market integrity through active on-site and off-site supervision of scheme operators and their investment activities.

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

Correct: Under the Employee Choice Arrangement (ECA), a relevant employee is granted the right to transfer the accrued benefits derived from their own mandatory contributions made during their current employment to a personal account of their choice once per calendar year. Furthermore, any mandatory contributions originating from former employment or self-employment that are currently held in a contribution account maintain high portability; these can be transferred to either a personal account or a contribution account in another scheme at any time, without the once-per-year restriction.

**Incorrect:** The employer’s portion of mandatory contributions attributable to current employment is strictly non-transferable while the employee remains in that job, as these funds are often retained to facilitate statutory offsetting. Restricting the transfer of benefits from former employment to only once per year or only to personal accounts is incorrect because the regulations allow these specific funds to be moved more flexibly to both personal and contribution accounts. Additionally, the ECA does not allow the transfer of current employee mandatory contributions into another contribution account; they must be moved to a personal account.

**Takeaway:** The ECA framework distinguishes between different sub-accounts: current employee mandatory contributions are transferable to personal accounts annually, while benefits from former employment are fully portable to any MPF account at any time, but current employer mandatory contributions remain locked in the original scheme.

Correct: Statements I, II, and III accurately reflect the statutory requirements and minimum controls prescribed for principal intermediaries under the MPFSO and MPFA Guidelines. A principal intermediary is legally mandated to provide its responsible officer with sufficient authority and resources to perform their duties. Additionally, the guidelines require the retention of training records for subsidiary intermediaries for at least three years and necessitate procedures for notifying the MPFA regarding the status of responsible officers and the withdrawal of consent for subsidiary intermediaries.

**Incorrect:** Statement IV is incorrect because the MPFA Guidelines specify that the internal controls and procedures should be proportionate to the scale of the principal intermediary’s operations, the number of subsidiary intermediaries attached, and the nature of the regulated activities. There is no requirement for a standardized, identical set of procedures across all firms regardless of their size or complexity.

**Takeaway:** A principal intermediary must implement a compliance framework that is both rigorous and appropriately scaled to its business operations, ensuring that responsible officers are adequately supported and that all regulatory reporting and record-keeping obligations are met. Therefore, statements I, II and III are correct.

Correct: According to the Mandatory Provident Fund Schemes (General) Regulation, an investment manager of an MPF scheme or an approved pooled investment fund (APIF) may delegate its investment management functions to another corporation, provided that the trustee gives its approval. A fundamental requirement for this delegation is that the delegate must be independent of the scheme’s trustee and custodian, as well as any delegates of the custodian, to ensure a proper system of checks and balances and to mitigate potential conflicts of interest.

**Incorrect:** The suggestion that a delegate must be a subsidiary of the trustee is incorrect because the law explicitly requires independence between the investment manager (and its delegates) and the trustee/custodian. The claim that warrants can comprise up to 15% of the portfolio is false, as the regulations cap warrant investments at a maximum of 5% of the total funds of a constituent fund or APIF. Furthermore, there is no regulatory restriction limiting equity investments solely to the Hong Kong Stock Exchange; managers are permitted to invest in shares listed on any stock exchange approved by the MPFA.

**Takeaway:** To safeguard scheme assets, MPF regulations require that any delegated investment manager must be approved by the trustee and maintain strict independence from the trustee and custodian functions.

Correct: Statements I, II, and III accurately reflect the regulatory framework for these fund types. MPF Conservative Funds are strictly mandated to invest 100% in Hong Kong dollar assets to eliminate currency risk and must adhere to a fee-capping mechanism where administrative expenses can only be deducted if the fund’s monthly performance outperforms the MPFA’s prescribed savings rate. Additionally, “soft” guarantees are a standard feature in the MPF market, where the guarantee is contingent upon the member meeting specific qualifying events such as reaching the retirement age of 65.

**Incorrect:** Statement IV is incorrect because an MPF Conservative Fund is not a guaranteed fund and does not provide any assurance of capital preservation or inflation-beating returns. In fact, during periods of high inflation, the returns on a Conservative Fund may lag behind the inflation rate. Furthermore, the fee restriction is based on the prescribed savings rate, not the inflation rate.

**Takeaway:** Intermediaries must distinguish between the structural safeguards of an MPF Conservative Fund (asset restrictions and fee caps) and the contractual promises of a Guaranteed Fund (which often require specific conditions to be met to remain valid). Therefore, statements I, II and III are correct.

Correct: Under the regulatory framework for the Mandatory Provident Fund (MPF) system, the Securities and Futures Commission (SFC) is specifically tasked with authorizing MPF schemes and their constituent funds. This responsibility includes the detailed vetting and authorization of disclosure information contained within offering documents and any marketing materials to ensure they provide adequate information to the public.

**Incorrect:** The Mandatory Provident Fund Schemes Authority (MPFA) is responsible for the overall administration of the MPF system and the registration of schemes, but it delegates the vetting of investment-related marketing materials to the SFC. The Insurance Authority (IA) focuses on the solvency of insurance companies and the supervision of intermediaries whose core business is insurance. The Monetary Authority (MA) regulates authorized institutions like banks to ensure their financial soundness when acting as custodians or guarantors.

**Takeaway:** While the MPFA is the primary regulator of the MPF system, the SFC plays a critical role in investor protection by authorizing MPF products and vetting the accuracy of their marketing and disclosure documents.

Correct: Under the principle of accountability within a trust arrangement, a trustee operates as a fiduciary for the scheme members. This legal relationship dictates that the trustee cannot personally benefit from the trust assets beyond the agreed-upon fees. Consequently, any and all profits generated from the management or investment of the trust properties must be fully transferred to the beneficiaries of the scheme, ensuring that the members receive the total economic benefit of their contributions.

**Incorrect:** Trustees are prohibited from retaining investment profits as performance-based incentives or bonuses, as this would conflict with their fiduciary duty to act solely in the interest of the members. Furthermore, the statutory requirement for a corporate trustee to maintain $150 million in paid-up share capital and net assets is a prerequisite for approval and must be met using the company’s own resources, not by diverting profits belonging to scheme members. While the MPFA supervises the industry, its funding does not come from a direct diversion of investment profits generated within individual member accounts.

**Takeaway:** The accountability framework of the MPF system ensures that the trustee remains a neutral administrator of the trust, where every dollar of profit generated by the trust assets is legally required to be credited to the scheme members.

Correct: Statement I is accurate because in Defined Benefit (DB) schemes, the employer’s contributions are variable and determined by actuarial valuations to ensure the promised benefits can be met. Statement II is correct as schemes established by other specific Hong Kong Ordinances (such as the MPFSO) are outside the scope of the ORSO registration and exemption process. Statement IV is correct because the regulatory framework classifies hybrid schemes, which contain both DC and DB elements, as defined benefit schemes.

**Incorrect:** Statement III is incorrect because the MPF exemption is not limited to ORSO registered schemes. Both ORSO registered schemes and ORSO exempted schemes (such as certain offshore schemes) are eligible to apply for an MPF exemption certificate, provided they meet the statutory requirements.

**Takeaway:** MPF intermediaries must distinguish between the different types of ORSO schemes, noting that both registered and exempted ORSO schemes can potentially obtain MPF exemption, and that hybrid schemes are technically treated as defined benefit schemes. Therefore, statements I, II and IV are correct.

Correct: Under the principle of restoration and the fiduciary duties of an MPF trustee, if a trustee fails to perform its duties or acts in a way contrary to the trust deed, it is liable for any resulting loss. The trustee must restore the lost value or provide compensation at its own expense. Crucially, the trustee is prohibited from using the assets of the MPF scheme to indemnify itself for liabilities arising from its own mistakes or breaches of trust.

**Incorrect:** The suggestion that liability is only triggered by fraudulent intent is incorrect, as a failure to exercise the required high degree of diligence and care (negligence) is sufficient to constitute a breach of trust. Furthermore, the trustee cannot limit its liability to the value of fees collected, nor can it pass the cost of its errors back to the scheme members through fee adjustments or by using scheme assets to cover indemnity costs, as this would violate the primary obligation to act in the interest of the beneficiaries.

**Takeaway:** MPF trustees hold a position of significant responsibility; they are the legal owners of the assets but must act solely for the benefit of the members, meaning any financial loss caused by the trustee’s failure to adhere to the trust deed must be personally rectified by the trustee.

Correct: For new employees who join an MPF Exempted ORSO Registered Scheme, a portion of their benefits is designated as Minimum MPF Benefits (MMB). These benefits are subject to the same preservation and withdrawal requirements as those mandated by the MPF Ordinance. This means that even though the member is in an ORSO scheme, the MMB portion cannot be paid out simply because the member leaves employment; it must generally be preserved until the member reaches the age of 65 or meets other specific statutory criteria such as early retirement at age 60, permanent departure from Hong Kong, or total incapacity.

**Incorrect:** It is incorrect to suggest that MMB can be withdrawn as a lump sum immediately upon resignation, as this would bypass the preservation intent of the MPF system. The calculation of MMB is not limited to voluntary contributions; it is defined as the lesser of the member’s actual accrued benefits under the ORSO scheme or the amount they would have accumulated had they been in an MPF scheme during that period. Furthermore, the age of the ORSO scheme does not grant an exemption from MMB rules for new employees; any new eligible employee choosing an MPF Exempted ORSO scheme after the MPF launch is subject to these preservation requirements.

**Takeaway:** The Minimum MPF Benefits (MMB) provision ensures that employees who opt for an MPF Exempted ORSO scheme maintain a level of benefit preservation and portability equivalent to the standard MPF system for their period of service.

Correct: Under the Mandatory Provident Fund (MPF) System, substitute workers in the catering and construction industries are generally required to be covered. These individuals are typically classified as casual workers, even if they are only performing another person’s duties for a few days and receive their payment in cash directly from the person they are substituting for. The law views these arrangements as part of the employment landscape within these specific industries, ensuring that short-term or informal labor is still captured within the social security net.

**Incorrect:** Shareholders and landlords are excluded from MPF coverage if their only source of income is passive, such as dividends or rent, provided they are not actually carrying on a business (in the case of landlords). These individuals are neither employees nor self-employed persons in the context of the MPF Schemes Ordinance. Furthermore, while some civil servants are covered by MPF, those who are already entitled to pension benefits under statutory pension schemes are generally exempt from the MPF System.

**Takeaway:** MPF coverage extends beyond traditional full-time roles to include casual and substitute workers in specific sectors like catering and construction, but it excludes individuals whose income is derived solely from passive investments or those already covered by alternative statutory pension systems.

Correct: Under the Mandatory Provident Fund Schemes Ordinance and the Interpretation and General Clauses Ordinance, if a contribution day falls on a Saturday, a public holiday, or a day where a gale warning or black rainstorm warning is in effect, the deadline is legally extended. The payment and the remittance statement must be received by the trustee on the next following day that does not fall into any of those categories. This ensures that employers are not penalized for the inability to process payments through banking systems or administrative offices during non-working days or extreme weather events.

**Incorrect:** It is incorrect to suggest that the deadline remains fixed regardless of the calendar; while the 60-day permitted period for enrolling an employee does not extend for holidays or weather, the contribution day specifically does. Moving the deadline to the preceding Friday is a common business practice to ensure safety, but it is not the statutory requirement. Furthermore, the law does not distinguish between public holidays and weather warnings in this context; both trigger the same extension mechanism.

**Takeaway:** While the 60-day enrollment window for new employees is a strict calendar count, the monthly MPF contribution deadline is flexible and shifts to the next available working day if it coincides with a Saturday, public holiday, or severe weather warning day.

Correct: In an MPF guaranteed fund, the guarantor is granted the discretionary power to retain a portion or all of the investment earnings. These retained funds serve two primary purposes: they can be taken as profit by the guarantor for providing the guarantee, or they can be used as a financial buffer to offset the fund’s underperformance during periods when market returns fall below the guaranteed level. Additionally, a reserve charge (also known as a guarantee fee) is typically deducted from the fund’s assets to compensate the guarantor for the risk assumed.

**Incorrect:** It is incorrect to suggest that all earnings above the guaranteed rate must be credited to members, as the guarantor’s ability to retain earnings is a defining feature of these products. The claim that reserve charges are prohibited is false, as they are a standard mechanism for funding the guarantee. Furthermore, there is no regulatory requirement that retained earnings must be placed in a statutory trust specifically to increase future guaranteed rates; the guarantor has much broader discretion over their use.

**Takeaway:** Investors in MPF guaranteed funds should understand that the security of a minimum return comes at the cost of potential upside, as the guarantor may retain surplus earnings and charge a reserve fee to manage the default risk and operational costs of the guarantee.

Correct: Statements I, II, and IV are accurate. The Performance Presentation Standards were jointly developed by the Hong Kong Trustees Association (HKTA) and the Hong Kong Investment Funds Association (HKIFA) to ensure that investment performance is reported in a consistent and comparable manner. The Guidelines on ORSO Interface provide the necessary framework for existing occupational retirement schemes to navigate MPF exemption requirements. Furthermore, the Guidelines on Scheme Operations set out the administrative expectations for trustees, including the management of contributions and member records.

**Incorrect:** Statement III is incorrect because the Compliance Standards for MPF Approved Trustees focus on the high-level internal control systems, fiduciary duties, and operational integrity of the trustee entities themselves. The registration and day-to-day conduct of individual sales agents are instead governed by the Guidelines on Intermediaries and the statutory regulatory regime for intermediaries.

**Takeaway:** The MPF regulatory environment relies on a multi-layered approach where MPFA-issued guidelines govern operations and intermediary conduct, while industry-led standards (like those from HKTA/HKIFA) ensure transparency and consistency in performance reporting. Therefore, statements I, II and IV are correct.