Proactive Supervisory Approach

The MPFA adopts a proactive, risk-based supervisory approach in supervising approved trustees. This approach encompasses both on-site visits and off-site monitoring, the scope of which is determined in part by the risk profile of each approved trustee.

Following the adoption of a risk-based approach in the supervision of approved MPF trustees, the MPFA has further developed regulatory tools to supervise trustees, with a view to helping them to develop good corporate governance, proper risk management and a strong compliance culture within their organizations.

On-site visits

The MPFA regularly conducts on-site visits to approved trustees to ensure compliance with regulatory requirements. These visits aim at reviewing various aspects of the operations of the trustees and their respective schemes, from a risk-based perspective. Approved trustees are required to rectify non-compliance issues and internal control weaknesses identified during these visits, and when warranted, financial penalties may be imposed on the trustees concerned.

Off-site monitoring

MPF trustees are required to submit returns, audited financial statements and reports in respect of the trustees and the schemes under their trusteeship, on a monthly, quarterly and annual basis. Audit reports are required to accompany certain returns to ensure an independent review of the financial position and the operation of the trustees and their respective schemes. All registered schemes, constituent funds, and approved pooled investment funds have to submit returns on a regular basis. The review of these returns ensures that the approved trustees comply with the statutory requirements and relevant governing rules, and allows for early detection of problems. For the protection of scheme members' interests, investigations and follow-up action will be carried out if deficiencies or contravention of the MPF legislation are identified.

As part of the ongoing monitoring process, approved trustees are required to report significant events as provided under section 62 of the Mandatory Provident Fund Schemes (General) Regulation. In this respect, the MPFA will undertake follow-up action to ensure that issues are properly rectified and that the control procedures are revised as necessary to adequately safeguard scheme members' interests.

The MPFA is responsible for processing changes of officers and other information of the approved trustees to ensure that they comply with the MPF legislation and the conditions of approval. The new appointment of directors or chief executive officers of approved trustees must have the prior consent of the MPFA.

Also, the MPFA takes follow-up action on complaints received. Complaints against trustees mostly originate from scheme participants. The complaint mechanism has been, and will continue to be, an important method for monitoring the performance of approved trustees. It is also an effective way to identify problems associated with the MPF System.