SFC regulations hindering Hong Kong's fund management industry
We hear of more regulatory madness. A reader writes to say that he has held an account with BlackRock, the world's largest provider of mutual funds and exchange-traded funds, for about 25 years. He rebalances his portfolio about twice a year by switching between various equity sector funds.
Late last year, he sent a switching instruction to BlackRock's Hong Kong office but was told: "Sorry, we don't have your risk profile and our internal regulators cannot allow your transaction." Because it was too troublesome to handle the Securities and Futures Commission's requirements, BlackRock stopped handling direct Hong Kong clients, so their business is now all through local intermediaries, which add to client costs.
Despite his 25-year involvement with BlackRock, he ended up having to transfer his investments from BlackRock Hong Kong. Subsequently, BlackRock issued a notice advising direct clients that they could no long buy or switch, only hold or redeem.
"The SFC is not protecting me, they are creating problems for me," he says. "They should be authorising a standard risk rating for all fund products offered in Hong Kong and investors should be left to make their own decisions." The solution, he says "is to go offshore where regulators and companies treat me as an adult".
So come on John Tsang, wake up and smell the coffee. Our regulators are seriously affecting Hong Kong's fund management business.
We return to the issue of the Building Management Ordinance, which the government is supposed to be revising. It remains a source of frustration for thousands of owners. The core of this frustration is that there is no way to get redress for rule breaking and criminality other than to go to the Lands Tribunal, which is expensive since it involves paying for legal representation. Since people are reluctant to take legal action, rule breaking is rampant. Owners' committees entrench themselves and serve well past the 15-month limit without calling elections. Management committees ignore calls from owners to produce their accounts.
Meanwhile, Home Affairs Department officials and district councillors will attend meetings, adding credibility to the proceedings without drawing attention to the breaches of the ordinance. Politicians are reluctant to get involved as they feel it is a poisoned chalice. Meanwhile, the government sticks its head in the sand. This is why many are calling for the setting up of a Building Affairs Tribunal to break the deadlock.
Stanley Wong, the chairman of the Grenville House Incorporated Owners Committee, told that his involvement with the running of the estate had been a "nightmare". During his involvement with ownership issues, Grenville has undertaken two major renovation projects. The first one in 1997 was not done properly, necessitating a further HK$103 million job in 2008. This has yet to be completed.
In the meantime, the project architect has been reprimanded by the Architects Registration Board, the project manager, and that was the same property management company terminated by Grenville, and the Incorporated Owners Committee has spent HK$3 million in legal and professional fees. Wong says the management company colluded with the committee on a number of issues and, before it left, it destroyed seven years of video and audio recordings of committee meetings.
"The [ordinance] is working against those of us trying to run estates in an open and transparent manner," he said.
