Surveys
Winds Set Fair For Hong Kong's Trusts Sector; Compliance A Headwind – Survey

A cluster of forces and new market developments bode well for the trusts sector in Hong Kong, but there is a need to get on top of compliance requirements.
Access to Chinese mainland clients, Asia’s growing private wealth
sector and improving industry credibility underpin a positive
outlook for Hong Kong’s trust industry, according to a survey
from the
Hong Kong Trustees’ Association and KPMG.
However, practitioners must overcome increasing compliance costs
and access to talent to improve business health, the report
said.
The HKTA and KPMG, which interviewed government officials and
regulators, and almost 30 trust industry executives, carried out
a digital survey of HKTA member institutions.
Hong Kong’s trust market grew by 10 per cent from 2021 to 2023,
with HK$5,188 billion ($667 billion) of assets held under trusts
at the end of 2023, compared with HK$4.719 trillion billion) when
the previous HKTA-KPMG report was issued in 2021.
When considering the most significant growth engines over the
next few years, almost a quarter (24 per cent) of respondents
identified Chinese Mainland and Greater Bay Area (GBA)
connectivity initiatives, such as Wealth Management
Connect.
A further 18 per cent selected the Capital Investment Entrant
Scheme (CIES) under which the Hong Kong government has been
attracting capital and family offices, and 18 per cent selected
similar initiatives focused on family offices and
philanthropy.
The report found that recent regulatory developments are
increasing confidence and enhancing protection for investors.
These include the introduction of RA13 for depositaries of
SFC-authorised Collective Investment Schemes (CISs) and the Hong
Kong Monetary Authority’s Supervisory Policy Manual Module
(TB-1). Some (64 per cent) of survey respondents said the
regulatory regime is conducive to business, compared with 51 per
cent in 2021.
However, while new regulations are improving the business
environment, they are also proving difficult to implement.
Almost two-thirds of respondents (64 per cent) reported
that their compliance costs had increased by at least 5 per cent
to 15 per cent over the past 12 months, partly because of
increasing regulatory complexity.
“While compliance, reporting and regulatory requirements are
becoming increasingly stringent, these new standards are also
bringing with them increased credibility. Hong Kong is rolling
out the red carpet for global wealth,” HKTA chairman Ka Shi Lau,
said. “The trust industry needs to step up now, work together,
and be proactive in serving these clients or risk missing out on
the opportunity to solidify Hong Kong’s position as a leading
global trust centre.”