On December 26, 2020, the People’s Bank of China (PBC), the China Banking and Insurance Regulatory Commission (CBIRC), the China Securities Regulatory Commission (CSRC) and the State Administration of Foreign Exchange (SAFE) jointly held regulatory talks with Ant Group. On behalf of the four financial regulators, PBC Deputy Governor Pan Gongsheng answered press questions on the talks.
Q: What was the background of the regulatory talks?
A: The Communist Party of China (CPC) Central Committee has attached great importance to well-regulated and healthy development of FinTech and platform companies. Recently, a series of important arrangements have been made at the meeting of the Political Bureau of the CPC Central Committee and at the Central Economic Work Conference to strengthen anti-monopoly stance and prevent disorderly capital expansion, setting explicit requirements for exercising financial regulation accordingly. Based on these fundamental guidelines, financial regulatory agencies will regulate financial market entities according to laws and regulations, severely punish illegal and irregular conduct, and strengthen constraints on disorderly capital expansion to safeguard a level playing field and maintain financial market order.
Since its establishment, Ant Group has played an innovative role in developing FinTech and improving the efficiency and inclusiveness of financial services. As a major influence in FinTech and the platform economy, Ant Group must readily abide by national laws and regulations, integrate corporate development into the big picture of national development, and live up to its social responsibility.
The regulatory talks with Ant Group were mainly aimed at urging and guiding it to thoroughly implement the relevant guidelines of the CPC Central Committee and the State Council; to fulfil, in line with market-oriented and law-based principles, financial regulatory requirements and the requirements for fair competition and protection of consumers’ legitimate rights and interests; and to further rein in the operation and development of its financial businesses.
Q: What were the regulatory talks mainly concerned about?
A: Based on financial laws, regulations and regulatory requirements, financial regulators pointed out the main problems in the operation of Ant Group. In short, it doesn’t have a sound mechanism of corporate governance; with weak law-abiding awareness, it defied regulatory compliance requirements and engaged in regulatory arbitrage; it took advantage of its market position to exclude business rivals; and it harmed the legitimate rights and interests of consumers, leading to consumer complaints.
Financial regulators put forward the following requirements to Ant Group for the rectification of its key businesses. First, it should return to its origins in payment services, improve trading transparency, and refrain from unfair competition. Second, it should operate the personal credit reporting business on a licensed basis in compliance with laws and regulations, and protect the privacy of personal data. Third, it should set up a financial holding company according to the law, and strictly implement regulatory requirements to ensure capital adequacy and regulatory compliance in related party transactions. Fourth, it should improve corporate governance and follow prudential regulatory requirements to rectify its financial activities, such as lending, insurance and wealth management services. Fifth, it should comply with laws and regulations to engage in securities and fund businesses, strengthen the governance of its securities institutions, and conduct asset securitization businesses in a compliant manner.
Ant Group should be fully aware of the severity and necessity of the rectification, and come up with a rectification plan and a timetable as soon as possible in line with regulatory requirements. Meanwhile, it should strengthen risk management, maintain business continuity and normal operation, and guarantee the quality of its financial services for the public.
Financial regulators will keep in close contact with Ant Group and remain fully open to its opinions.
Q: What is the direction of financial regulatory policies on FinTech?
A: Financial regulators will stay committed to encouraging and supporting innovations by FinTech companies that serve the real economy and comply with prudential regulation, so as to help FinTech become an important drive for development based on dual circulation. FinTech companies should stay true to their obligation of serving the real economy and the people, and develop the awareness to strictly observe financial regulatory requirements, to firmly safeguard a level playing field, and to place consumer rights protection at the core of service provision.
The direction of future regulatory policies will be set in line with the following principles. The first is to break down monopoly, redress and punish the conduct of unfair competition, and safeguard an enabling market order for fair competition. The second is to ensure that all financial activities be brought under regulatory coverage in accordance with relevant laws and regulations, that financial businesses be conducted on a licensed basis, and that there be “zero tolerance” for all types of illegal or irregular conduct. The third is to adhere to the “two unwavering commitments”, which means unwavering support for the development of both the public sector and the non-public sector, legally protect property rights, promote entrepreneurship, energize market entities and social creativity, and enhance the core competitiveness of China’s FinTech companies in the global arena.
FinTech and Internet platform companies, which are newly emerging and undergoing rapid innovation and development, have taken on many new features. Financial regulatory agencies will continue to enhance international regulatory exchanges and cooperation so as to promote FinTech innovations and the healthy development of the financial system with joint efforts.
