Mandatory Provident Fund Quiz 28

Correct: According to section 34T(2) of the Mandatory Provident Fund Schemes Ordinance (MPFSO), when a principal applicant intends to appoint an individual who is not yet a registered subsidiary intermediary as their responsible officer, three specific applications must be submitted concurrently. These include the individual’s application for registration as a subsidiary intermediary (under section 34U(1)), the principal applicant’s application for approval of the individual’s attachment to them (under section 34V(1)), and the principal applicant’s application for approval of that individual as a responsible officer (under section 34W(1)).

**Incorrect:** Options that suggest only two of these three components are required are legally insufficient. For instance, submitting only the registration and responsible officer approval applications misses the mandatory attachment approval. Similarly, suggesting that a notification to an industry regulator replaces the statutory requirement for an attachment application under the MPFSO is incorrect, as the MPFA requires specific formal applications for the intermediary framework to be validly established.

**Takeaway:** To ensure a valid registration of a principal intermediary with a new responsible officer, the MPFSO requires a tripartite set of concurrent applications covering the individual’s registration, their formal attachment to the principal, and their approval as a responsible officer.

Correct: According to the regulations governing Mandatory Provident Fund schemes, if a cheque for accrued benefits is not presented within its six-month validity period (the Specified Period), the trustee must then attempt to locate the claimant. The benefits are officially classified as unclaimed benefits only at the end of a further six-month period following the expiry of the Specified Period, provided the trustee has been unable to locate the member during that time.

**Incorrect:** Classifying benefits as unclaimed immediately upon the expiry of the six-month cheque validity is incorrect because the law requires an additional six-month window for the trustee to actively search for the member. The suggestion that classification occurs one month after three contact attempts is a confusion of the specific procedural steps (making three attempts within one month) with the final legal classification timeline. A three-year waiting period is not supported by the current MPF legislation regarding unpresented cheques.

**Takeaway:** Accrued benefits transition to ‘unclaimed’ status after a total of 12 months from the cheque issue date (6 months validity + 6 months search period) if the member cannot be found.

Correct: Statements I, II, III, and IV are all accurate reflections of the Mandatory Provident Fund Schemes Ordinance (MPFSO). The MPFA is empowered to impose pecuniary penalties up to the greater of HK$10,000,000 or three times the profit gained/loss avoided. It also has the authority to revoke or suspend the registration of intermediaries and responsible officers upon conviction of an offence. Furthermore, disciplinary actions can include both public and private reprimands, and criminal liability for providing false information with the intent to defraud carries a maximum penalty of 7 years’ imprisonment and a HK$1,000,000 fine on indictment.

**Incorrect:** None of the statements are incorrect. A common misunderstanding is that the MPFA can only issue public reprimands, but the legislation explicitly allows for private reprimands as well. Additionally, it is important to distinguish between the 2-year imprisonment term for reckless provision of false information and the more severe 7-year term reserved for cases involving an explicit intent to defraud.

**Takeaway:** The MPFA maintains a robust enforcement framework that combines administrative disciplinary orders, such as fines and registration revocation, with severe criminal sanctions for fraudulent conduct during investigations to ensure the integrity of the MPF system. Therefore, all of the above statements are correct.

Correct: The Mandatory Provident Fund Schemes Authority (MPFA) possesses a wide range of supervisory and enforcement powers to ensure trustees comply with the Mandatory Provident Fund Schemes Ordinance. These powers include the authority to order remedial actions to correct breaches, conduct formal investigations, and impose financial penalties that are proportionate to the severity of the non-compliance. For more serious cases, the MPFA can suspend a trustee and appoint a temporary replacement, or even terminate the trustee’s administration and revoke their approval status.

**Incorrect:** All the statements provided (I, II, III, and IV) are accurate descriptions of the MPFA’s statutory powers. There are no incorrect statements in this selection. It is also worth noting that if a breach constitutes a criminal offence, the trustee may be liable to a fine of up to $200,000 and imprisonment for up to 2 years upon conviction.

**Takeaway:** The MPFA utilizes a tiered enforcement strategy, ranging from corrective remedial orders and financial penalties to the suspension or permanent revocation of a trustee’s approval, depending on the gravity of the regulatory breach. Therefore, all of the above statements are correct.

Correct: Statements I, II, and III accurately describe the regulatory framework and operational characteristics of these fund types. MPF Conservative Funds are strictly regulated to maintain liquidity and low risk, requiring 100% Hong Kong dollar investments with an average maturity not exceeding 90 days and a total ban on equities. Furthermore, their fee structure is unique; administrative fees can only be deducted if the fund’s monthly return outperforms the MPFA’s prescribed savings rate. Regarding Guaranteed Funds, a “soft” guarantee is conditional, meaning the guarantor only honors the minimum return if the member meets specific criteria, such as reaching the retirement age of 65.

**Incorrect:** Statement IV is incorrect because the Mandatory Provident Fund Schemes (General) Regulation explicitly prohibits MPF Conservative Funds from charging initial fees, redemption fees, or bid-offer spreads. These safeguards are in place to protect the capital of members seeking a very conservative investment option.

**Takeaway:** MPF Conservative Funds have unique statutory fee restrictions linked to the prescribed savings rate and are prohibited from charging entry or exit spreads, while Guaranteed Funds (especially those with soft guarantees) require members to satisfy specific qualifying conditions to benefit from the guarantee. Therefore, statements I, II and III are correct.

Correct: Statements I, II, and IV are accurate descriptions of MPF fund characteristics. Statement I correctly identifies that guarantors have the discretion to retain earnings for profit or to buffer against periods of poor performance. Statement II reflects the regulatory requirement that guarantors must hold sufficient reserves to ensure they can meet their financial obligations to scheme members. Statement IV accurately places mixed asset (balanced) funds in the middle of the risk-return spectrum, between lower-risk bond funds and higher-risk equity funds.

**Incorrect:** Statement III is incorrect because the primary objective of a bond fund is typically to provide a stable level of income through interest payments. While bond funds can trade securities for profit, capital appreciation is generally considered a secondary objective compared to income generation.

**Takeaway:** MPF scheme members should understand that different fund types carry distinct risks and objectives; for instance, guaranteed funds involve guarantor credit risk and specific fee structures like reserve charges, while mixed asset funds seek to balance risk through diversification across asset classes. Therefore, statements I, II and IV are correct.

Correct: According to the MPFA Guidelines on Conduct for Registered Intermediaries, when a client chooses a fund with a risk level higher than their assessed profile (a risk mismatch), the intermediary must inform the client of the mismatch, explain the specific risks involved, and confirm that the choice is the client’s own decision. The intermediary is also required to document the client’s reasons for the selection and ensure the client signs the acknowledgment. Furthermore, the principal intermediary must retain the original signed document for a minimum of seven years, and if the conversation was not audio-recorded, a post-sale call or confirmation must be performed to maintain an audit trail.

**Incorrect:** It is not sufficient to merely provide a verbal warning or to keep records for a shorter duration (such as 2 or 5 years). The guidelines specifically mandate that the client’s reasons be documented and that a signature be obtained to confirm the accuracy of the information. Failing to implement a post-sale verification when audio recording is unavailable would also constitute a failure to comply with the required audit trail standards.

**Takeaway:** The risk mismatch procedure is a mandatory compliance process that includes disclosure, documentation of client intent, long-term record retention, and specific communication verification methods. I, II, III & IV. Therefore, I, II, III & IV is correct.

Correct: Statements I, II, and III are accurate reflections of MPF regulatory requirements and fund structures. Fund Fact Sheets (FFS) must be issued on a half-yearly basis to ensure members receive timely updates on fund performance, portfolio allocation, and risk levels. A ‘soft guarantee’ is defined by the presence of qualifying conditions, such as a minimum holding period or a ‘career average’ requirement, which must be met for the guarantee to take effect. Furthermore, the Fund Expense Ratio (FER) and the fund risk indicator are mandatory disclosures within the FFS to facilitate informed decision-making by scheme members.

**Incorrect:** Statement IV is incorrect because it describes the characteristics of a ‘soft guarantee’ rather than a ‘hard guarantee’. A hard guarantee is unconditional, meaning the minimum return or capital preservation is promised without the member needing to satisfy specific criteria like a ‘career average’ or a minimum period of employment.

**Takeaway:** MPF scheme members should utilize the semi-annual Fund Fact Sheet to evaluate fund costs and risks, while carefully distinguishing between hard and soft guarantees, as the latter requires meeting specific conditions to benefit from the promised return. Therefore, statements I, II and III are correct.

Correct: Statements I, III, and IV are accurate reflections of the regulatory framework in Hong Kong. The Securities and Futures Commission (SFC) is responsible for licensing investment managers who handle MPF portfolios. The Insurance Authority (IA) is the frontline regulator for MPF intermediaries whose primary business is insurance. Additionally, the Mandatory Provident Fund Schemes Authority (MPFA) is empowered to establish rules and guidelines concerning the administration of schemes and the payment of mandatory contributions.

**Incorrect:** Statement II is incorrect because the responsibility for regulating authorized institutions (such as banks) to ensure they maintain financial soundness while acting as MPF custodians or guarantors lies with the Monetary Authority (MA), not the MPFA. The MPFA focuses on the overall administration and legislative reform of the MPF system rather than the prudential supervision of banking institutions.

**Takeaway:** The MPF system operates under a lead-regulator model where the MPFA oversees the scheme’s operation and legislation, while the SFC, IA, and MA supervise intermediaries and specific service providers according to their respective sectors (securities, insurance, and banking). Therefore, statements I, III and IV are correct.

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, are fully and immediately vested in the scheme member. This ensures that the accrued benefits belong to the employee regardless of their length of service. Additionally, the system is designed as a ‘fully-funded’ model, meaning that the assets held within the schemes are specifically accumulated to cover all future benefit payments when members eventually withdraw their funds.

Correct: Statements I, II, and III accurately reflect the regulatory requirements and procedures under the MPF system. Statement I is correct because trustees are mandated to take immediate action if a cheque is returned before its 6-month validity period expires. Statement II correctly identifies the specific due diligence requirement of making three contact attempts at different times within a one-month window. Statement III is correct as the Employment Ordinance allows employers to offset Long Service Payments (LSP) or Severance Payments (SP) against the accrued benefits derived from the employer’s contributions.

**Incorrect:** Statement IV is incorrect because unclaimed benefits do not cease to belong to the member. Even after being classified as unclaimed and listed on the MPFA’s Unclaimed Benefits Register for public search, these benefits continue to vest in the scheme member and remain their property within the scheme.

**Takeaway:** To classify benefits as unclaimed, a trustee must follow a rigorous process involving a 6-month cheque validity period followed by a 6-month search period, including specific contact attempts and employer inquiries, while ensuring the member’s right to the benefits remains protected. Therefore, statements I, II and III are correct.

Correct: To withdraw MPF benefits on the ground of a small balance, the member’s account balance in that specific scheme must not exceed $5,000. Additionally, the member must provide a statutory declaration stating they do not intend to become employed or self-employed again, confirm that at least 12 months have elapsed since the contribution day of the latest contribution period for which a mandatory contribution was required, and verify that they do not hold any accrued benefits in any other MPF schemes.

**Incorrect:** Options suggesting a balance limit of $10,000 are incorrect because the statutory threshold is strictly $5,000. A 6-month waiting period is insufficient, as the law requires at least 12 months to have passed since the last contribution. Requirements involving medical certificates for terminal illness or proof of permanent departure represent entirely separate grounds for early withdrawal and are not applicable to the small balance criteria.

**Takeaway:** The small balance withdrawal is a specific provision intended for members with accounts of $5,000 or less who have exited the workforce and have no other MPF holdings, provided 12 months have passed since their last contribution.

Correct: Statement I is accurate as the Fund Fact Sheet (FFS) is a mandatory disclosure document issued every six months (half-yearly) that provides a summary of the fund’s status, including its Fund Expense Ratio (FER), risk indicators, and investment performance. Statement II is correct because a ‘hard guarantee’ is defined by the absence of qualifying conditions for the guaranteed return, unlike a ‘soft guarantee’ which may require a minimum investment period or career average. Statement III is correct as Industry Schemes are specifically restricted to the catering and construction sectors to handle the high labor mobility and daily wage practices inherent in those industries. Statement IV accurately reflects the statutory maximum relevant income cap of $30,000 per month for non-casual employees for the purpose of mandatory contributions.

**Incorrect:** A statement would be incorrect if it suggested that the Fund Fact Sheet is issued on a monthly or annual basis, or if it confused the ‘hard guarantee’ with a ‘soft guarantee’ (which requires qualifying conditions). Additionally, it would be incorrect to state that Industry Schemes are available for all sectors or that the maximum income cap for non-casual employees is $1,000 per day, as that specific daily cap applies only to casual employees within an Industry Scheme.

**Takeaway:** MPF intermediaries must be proficient in the specific disclosure timelines and the distinct characteristics of MPF products, such as the difference between hard and soft guarantees, the scope of Industry Schemes, and the applicable income caps for different employee categories. All of the above. Therefore, all of the above statements are correct.

Correct: Under the regulatory framework and specifically the Guidelines on Notification of Events of Significant Nature (II.9), an approved trustee is required to notify the MPFA in writing as soon as reasonably practicable after becoming aware of any event that is of a significant nature. A major failure in internal systems that affects the accuracy of member accounts or contribution allocations is considered a significant event because it directly impacts the interests of the scheme members and the operational integrity of the scheme.

**Incorrect:** Waiting until the next quarterly statistical return is inappropriate because significant events require more immediate attention than routine periodic reporting allows. Implementing an arbitrary financial threshold, such as HK$1 million, is incorrect because the requirement for notification is based on the nature and potential impact of the event on members, not just a specific dollar amount. Similarly, delaying a report based on the duration of the issue (e.g., 14 days) is not permitted, as the obligation to notify begins as soon as the trustee becomes aware of the significant event.

**Takeaway:** Approved trustees must proactively report significant operational or financial incidents to the MPFA as soon as possible to ensure regulatory oversight and the protection of scheme members’ interests.

Correct: Under the Mandatory Provident Fund Schemes (General) Regulation, an MPF Conservative Fund is subject to specific fee restrictions to protect members’ interests. Administrative expenses, which include investment management fees and trustee fees, can only be deducted from the fund if the investment return of the fund in a particular month exceeds the prescribed savings rate (based on the interest rates of the three largest note-issuing banks in Hong Kong) as declared by the MPFA.

**Incorrect:** MPF Conservative Funds are strictly prohibited from charging initial fees, redemption charges, or bid-offer spreads. This ensures that the fund remains a low-cost vehicle for capital preservation. Furthermore, all constituent funds, including the MPF Conservative Fund, are required to provide data for the Fee Comparative Platform, including their Fund Expense Ratio (FER), to maintain transparency across the MPF system.

**Takeaway:** The MPF Conservative Fund has a unique ‘performance-linked’ fee structure where administrative expenses are only collectible if the fund’s return outperforms the MPFA’s prescribed savings rate, and it is prohibited from charging entry or exit fees.

Correct: For regular employees (those who are not casual employees), the employer’s obligation to make mandatory contributions begins on the first day of employment. However, the employee is entitled to a “contribution holiday,” which encompasses the first 30 days of employment and any incomplete contribution period that immediately follows. In this scenario, the employer must contribute 5% of the relevant income from the start date, but the employee is exempt from making their own 5% contribution for that initial period.

**Incorrect:** The suggestion that both the employer and employee are exempt during the first 30 days is incorrect because the contribution holiday applies strictly to the employee’s portion. The claim that the employee must contribute from day one because their income exceeds the minimum threshold is false, as the contribution holiday rule for regular employees overrides the standard income-based requirement for the initial period. Furthermore, the employer’s liability is not deferred until after a probationary or 30-day period; it is a statutory requirement that begins immediately upon the start of employment.

**Takeaway:** Under MPF regulations, regular employees enjoy a contribution holiday for the first 30 days of employment and the following incomplete contribution period, whereas employers must fulfill their contribution obligations starting from the employee’s first day of work.

Correct: In the event of a breach of trust, such as acting contrary to the provisions of the trust deed, the trustee is held liable for any resulting loss or reduction in the trust property. The principle of restoration requires the defaulting trustee to restore the property or pay sufficient compensation at their own expense. Crucially, the trustee is prohibited from using the assets of the MPF scheme to indemnify themselves against liabilities arising from their own mistakes or breaches of duty.

**Incorrect:** It is incorrect to suggest that a trustee can use scheme assets or accrued interest to cover losses caused by their own breach of trust, as this would unfairly penalize the beneficiaries. Furthermore, liability for a breach of trust is not limited to cases of gross negligence or fraud; any failure to perform required duties or performing unauthorized acts constitutes a breach. While members do bear market-related investment risks, they are legally protected against losses specifically caused by a trustee’s failure to adhere to the trust deed or fiduciary duties.

**Takeaway:** MPF trustees operate under a fiduciary relationship that requires them to act solely in the interests of beneficiaries; any financial loss resulting from a breach of the trust deed must be personally rectified by the trustee without recourse to the scheme’s funds.

Correct: The Annual Benefit Statement (ABS) is a regulatory requirement designed to provide scheme members with a comprehensive historical record of their account. According to the Disclosure Code, the trustee must issue this statement within three months after the end of the scheme’s financial period. It must include specific details such as the member’s account balance, the status of contributions and transfers, the extent to which benefits are vested, and the investment gains or losses recorded during that period.

**Incorrect:** The timeframe for issuing the ABS is three months, not six months. The document is strictly a historical record of the member’s account at a specific point in time, rather than a tool for providing forward-looking projections or future return forecasts. Additionally, the ABS must disclose the gains and losses associated with the account, and it is not the primary vehicle for disclosing the Fund Expense Ratio (FER) for new funds, especially since funds with less than two years of history are exempt from showing an FER.

**Takeaway:** Under MPF regulations, the Annual Benefit Statement serves as a vital transparency tool that must be delivered to members within three months of the financial year-end to confirm their membership details and account transactions.

Correct: Statements I, III, and IV are correct. According to Section 34ZL of the Mandatory Provident Fund Schemes Ordinance (MPFSO) and the MPFA Guidelines, a principal intermediary is required to provide its responsible officer with sufficient authority and resources to carry out their specified responsibilities. Furthermore, the firm must have arrangements to notify the MPFA if a responsible officer no longer satisfies the statutory requirements and must implement controls to ensure that only registered intermediaries undertake regulated activities on its behalf. I, III & IV only.

**Incorrect:** Statement II is incorrect because the MPFA Guidelines (III.60(k)) specify that records of training and documentary evidence of completion for subsidiary intermediaries must be kept for a minimum period of three years, rather than five years.

**Takeaway:** Principal intermediaries are responsible for maintaining a rigorous compliance framework that includes supervising subsidiary intermediaries, supporting responsible officers with adequate resources, and maintaining specific records for the statutory minimum of three years. Therefore, statements I, III and IV are correct.

Correct: Under the Mandatory Provident Fund Schemes Ordinance, relevant income is defined as any wages, salary, leave pay, fee, commission, bonus, gratuity, perquisite, or allowance expressed in monetary terms, paid by an employer in consideration of employment. In this scenario, the cash-based housing allowance, the year-end performance bonus, and the sales commissions all fall under this definition as they are monetary rewards provided in exchange for the employee’s services. Consequently, the components that qualify as relevant income are I, III, and IV only.

**Incorrect:** Statutory severance payments and long service payments made under the Employment Ordinance (Cap. 57) are explicitly excluded from the definition of relevant income for MPF purposes. Therefore, any combination that includes the statutory severance payment is inaccurate. Additionally, excluding valid components such as performance bonuses or cash allowances would result in an incorrect calculation of the mandatory contributions required by law.

**Takeaway:** While the definition of relevant income is broad and covers most monetary employment benefits and incentives, it specifically exempts statutory payments related to severance and long service.

Correct: Statements I, III, and IV accurately describe the regulatory process for addressing a failure to meet continuing training requirements. Under the MPFSO, the MPFA first issues a written notice providing at least 30 days for completion. If this notice is ignored, the MPFA has the authority to suspend the intermediary’s registration. Furthermore, if the intermediary remains non-compliant for 30 days following the suspension, the MPFA may proceed to revoke the registration entirely.

**Incorrect:** Statement II is incorrect because the Mandatory Provident Fund Schemes Authority (MPFA) is the sole authority empowered to impose disciplinary sanctions. While Frontline Regulators (FRs) are responsible for the day-to-day supervision and investigation of intermediaries, they do not have the power to suspend or revoke registrations; they provide their findings to the MPFA for the final decision on sanctions.

**Takeaway:** The disciplinary process for training non-compliance follows a specific statutory sequence (Notice -> Suspension -> Revocation) and highlights the division of labor where FRs investigate but the MPFA remains the exclusive disciplinary body. Therefore, statements I, III and IV are correct.

Correct: Statements I, II, and III are accurate according to the Mandatory Provident Fund Schemes Ordinance. Relevant income is broadly defined to include wages, bonuses, and allowances paid in consideration of employment. For regular employees (non-casual), the permitted period for enrollment is the first 60 days of employment. Additionally, employees are exempt from making their own mandatory contributions for any wage period that commences on or before the 30th day of employment, often referred to as a contribution holiday.

**Incorrect:** Statement IV is incorrect because the definition of relevant income specifically excludes severance payments or long service payments made under the Employment Ordinance (Cap. 57). Therefore, these payments do not attract MPF contributions.

**Takeaway:** Employers must distinguish between regular remuneration (relevant income) and statutory termination payments (severance/long service) when calculating MPF contributions, while adhering to the 60-day enrollment window and the 30-day employee contribution holiday. Therefore, statements I, II and III are correct.

Correct: According to Section 34W(1) of the Mandatory Provident Fund Schemes Ordinance (MPFSO), for an individual to be approved as a Responsible Officer (RO), they must be a subsidiary intermediary already attached to the principal intermediary (Statement I). The individual must also be granted sufficient authority and provided with the necessary resources and support within the firm to fulfill their specified responsibilities (Statement III). Additionally, the MPFA requires that the individual has not had an RO approval revoked within the one year immediately preceding the application date (Statement IV).

**Incorrect:** Statement II is incorrect because the MPFSO does not specify a minimum duration of prior experience (such as two years) as a requirement for RO approval; the focus is instead on the individual’s current attachment, authority, and the absence of recent regulatory revocations or disqualifications.

**Takeaway:** To qualify as a Responsible Officer for an MPF principal intermediary, an individual must be an attached subsidiary intermediary with sufficient internal authority and a clean regulatory record regarding RO status for at least one year prior to the application. Therefore, statements I, III and IV are correct.

Correct: Under the Mandatory Provident Fund (MPF) framework, while voluntary contributions are managed under the same statutory safety standards as mandatory contributions, they are treated differently regarding benefit access. Specifically, the rules governing vesting (when the money belongs to the employee), preservation (how long it must stay in the scheme), portability (moving it between schemes), and withdrawal (the conditions for payout) are determined by the individual governing rules of the specific MPF scheme rather than the strict statutory requirements of the MPF Ordinance.

**Incorrect:** The suggestions that voluntary contributions are exempt from using approved trustees, qualified investment managers, or indemnity insurance are incorrect. The MPF legislation requires that all assets within an MPF scheme, regardless of whether they originate from mandatory or voluntary sources, must be managed by the same approved trustees and professional managers, and must be protected by indemnity insurance to safeguard the interests of the scheme members.

**Takeaway:** Although voluntary contributions are subject to the same professional management and custodial regulations as mandatory contributions, their specific terms for vesting and withdrawal are flexible and governed by the individual scheme’s rules.

Correct: Statements I, II, and III accurately reflect the disciplinary and appeal procedures stipulated under the Mandatory Provident Fund Schemes Ordinance (MPFSO). The MPFA is required to provide a written notice of its preliminary view and the proposed sanction, allowing the intermediary to make representations in either oral or written form. If a decision is finalized, the intermediary has a statutory period of two months to lodge an appeal with the Mandatory Provident Fund Schemes Appeal Board.

**Incorrect:** Statement IV is incorrect because the MPFA is required to maintain a record of disciplinary orders in the Register of Intermediaries for a period of five years, not ten years. Additionally, while the MPFA generally discloses disciplinary details, private reprimands are specifically excluded from public disclosure.

**Takeaway:** The MPF regulatory framework ensures procedural fairness by requiring the MPFA to provide preliminary notices and representation opportunities, while also providing a clear two-month window for independent appeals and a five-year public record of misconduct. Therefore, statements I, II and III are correct.

Correct: According to the MPF Guidelines, when a client selects a constituent fund that carries a higher risk than their assessed risk profile, a post-sale call must be initiated within seven working days and must be audio recorded. If the client cannot be reached after several attempts, the principal intermediary is required to send a document to the client to confirm the fund choice and the risk mismatch to ensure the client is fully aware of their decision.

**Incorrect:** The call must be conducted by an authorized person of the principal intermediary other than the subsidiary intermediary who performed the regulated activity to ensure independent verification. Additionally, the guidelines explicitly state that the processing of the client’s instruction does not need to wait for the completion of the post-sale call process, meaning the transaction can proceed while the call attempts are being made.

**Takeaway:** The post-sale call is a mandatory compliance safeguard for risk-mismatched transactions that requires independent verification within a specific timeframe, though it does not delay the execution of the instruction. I and IV only.