To further enhance the regulation of financial marketing, support moves to prevent and defuse major financial risks and effectively protect the legitimate rights and interests of financial consumers, 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 issued and implemented the Notice on Further Enhancing Regulation of Financial Marketing (hereinafter referred to as the Notice). Officials from the PBC, CBIRC, CSRC and SAFE answered press questions on the Notice.
I．What is the background of releasing the Notice?
General Secretary Xi Jinping has stressed on many occasions that preventing and defusing financial risks, especially preventing systemic financial risks, should be the fundamental task in the financial system. Recent years have seen the successive occurrence of financial activities in violation of laws and regulations, and a common rationale lies behind these activities: As financial consumers are misled and lured by a massive number of illegal financial marketing at the early stage of these activities, and they have yet to be equipped with well-established financial literacy and awareness of risk prevention, these activities will often result in victimization of the consumers and cause serious damage to their legitimate rights and interests. The Notice will help to harmonize the criteria in regulating financial marketing, prompt market entities to conduct financial marketing in strict accordance with laws and regulations, and hence play an important role in protecting the legitimate rights and interests of financial consumers and supporting the moves to prevent and defuse financial risks.
II. What are the major contents of the Notice?
First, the Notice specifies the qualifications for market entities to advertise their products or services. Market entities must first obtain operational qualifications for corresponding financial businesses before conducting the marketing by themselves or entrusting others to do so. Second, the Notice clarifies the duties of the regulators. The financial regulators under the State Council and their branches or local offices should fulfill their statutory mandate to exercise effective regulation of financial marketing, and strengthen the cooperation with relevant departments under local governments to implement the regulation requirements on financial marketing and illegal finance-related marketing activities in their respective jurisdictions. Third, the Notice makes clear the norms of financial marketing, laying out specific requirements how operators of financial products or services should standardize management and rules. Fourth, the Notice sets out relevant regulatory measures against illegal financial marketing, and specifies its effective date as well as other relevant provisions.
III. What are the qualification requirements for market entities to engage in financial marketing in the Notice?
Financial institutions in the banking, securities and insurance sectors and other institutions that engage in law-based financial or finance-related businesses shall conduct financial marketing within the scope of financial businesses approved by financial regulators under the State Council and local financial authorities, and must not conduct any activities beyond the approved scope of business.
For market entities that fail to obtain qualifications for certain financial businesses, they shall not conduct any marketing related to such businesses, except for the cases where entities such as information platforms and media are entrusted by operators of financial products or services that have obtained qualifications to conduct financial marketing.
IV. What are the specific requirements for regulating financial marketing in the Notice?
According to the Notice, operators of financial products or services should establish and improve the internal control system and the management and monitoring mechanism for financial marketing, and enhance the checking of financial marketing by their business partners. Meanwhile, it also explicitly prohibiting some improper financial marketing practices that have aroused strong public resentment. First, one shall not conduct financial marketing in an unlawful manner or beyond the approved scope of business. Second, one shall not market financial products or services in any deceptive or misleading ways. Third, one shall not conduct financial marketing in a way that impairs fair competition. Fourth, one shall not conduct financial marketing by exploiting the credibility of governments. Fifth, one shall in no means damage financial consumers’ right to know. Sixth, one shall not exploit the Internet to conduct improper financial marketing. Seventh, one shall not disseminate financial marketing information to financial consumers in an unlawful manner. Eighth, one shall not conduct any other illegal financial marketing or promotional activities prescribed by laws and regulations or financial regulators.
