On December 18, the State Administration of Financial Supervision and Administration solicited public comments on the Administrative Measures for Consumer Financial Companies (Consultation Draft) (hereinafter referred to as the "Measures").
It is reported that this is the second revision in 10 years since the first revision of the "Measures for the Administration of Pilot Projects for Consumer Finance Companies" in 2013.
At the same time, the content of this revision mainly involves optimizing access policies, highlighting hierarchical business supervision, strengthening corporate governance, strengthening risk management, focusing on the protection of consumer rights and interests, standardizing the management of cooperative institutions, and improving the market exit mechanism.
This is the second revision after 10 years.
Regarding the background of this revision, the relevant person in charge of the State Administration of Financial Supervision and Administration said in response to reporters' questions that since the revision and promulgation, the "Measures for the Administration of Pilot Projects for Consumer Financial Companies" (Order No. 2 of 2013 of the China Banking Regulatory Commission) has played an important role in leading consumer finance companies to adhere to the functional positioning of professional consumer credit and promoting the basic role of consumption in the economy.
However, the above-mentioned person in charge also said that in recent years, with the development and change of China's economic and financial situation, the business model and risk characteristics of the consumer finance company industry have undergone significant changes, and the current measures have been unable to meet the high-quality development and regulatory needs of consumer finance companies.
It is reported that the "Measures" have a total of 10 chapters and 79 articles, and the revision mainly involves the following aspects:
The first is to raise access standards. Raise the standards of assets, operating income and other indicators of major investors, as well as the minimum shareholding ratio requirements, and promote shareholders to actively play a supporting role and effectively assume shareholder responsibilities;Increase the shareholding ratio of investors with experience in consumer finance business management and risk control, and better play the role of compliance and risk control of such investors;Raise the minimum registered capital requirements for consumer finance companies to enhance risk resilience.
The second is to strengthen the supervision of business classification. Distinguish between basic business and special business scope, cancel non-main business and non-essential business, and strictly supervise business at different levels. Appropriately broaden financing channels and enhance shareholders' liquidity support capabilities.
The third is to strengthen the supervision of corporate governance. Fully implement the regulatory regulations and institutional requirements on corporate governance, shareholder equity, related party transactions and information disclosure issued by the State Administration of Financial Supervision in recent years, and clarify the regulatory requirements for party building, "three committees and one layer", shareholder obligations, salary management, related party transactions, information disclosure and other aspects in combination with the organizational form and equity structure of consumer finance companies.
Fourth, strengthen risk management. Clarify the regulatory requirements for consumer finance companies in areas such as credit risk, liquidity risk, operational risk, information technology risk, and reputational risk management, optimize and add some regulatory indicators, and improve the market exit mechanism.
Fifth, strengthen the protection of consumer rights and interests. Consolidate the main responsibility of consumer protection of consumer finance companies, improve and improve various mechanisms for consumer protection work, strengthen the standardized management of cooperative institutions, and practice the political and people's nature of finance.
A number of revisions were made.
Compared with the past, the above-mentioned person in charge said that the "Measures" will increase the shareholding ratio of major investors of consumer finance companies from no less than 30% to no less than 50%;The business scope of the consumer finance company has been optimized and adjusted, and the main business has been more focusedIt stipulates that the balance of the credit enhancement business guaranteed by a consumer finance company shall not exceed 50% of the company's total loan balance, and a certain period of rectification and transition shall be given in the futureRequire consumer finance companies to have a leverage ratio of no less than 4% and restrict blind expansionTwo special chapters have been added, namely "Protection of Consumer Rights and Interests" and "Management of Cooperative Institutions", to give more prominence to strengthening the protection of consumer rights and interests.
For the increase in the proportion of capital contribution, the relevant person in charge of the State Administration of Financial Supervision and Administration said that the main considerations are: First, from the perspective of regulatory practice in recent years, increasing the shareholding ratio of major investors is conducive to consolidating shareholder responsibilities, enhancing shareholders' willingness to participate in the company's operation, giving better play to the advantages of shareholder resources, and promoting shareholders to actively play a supporting role. Second, it is conducive to improving the efficiency of decision-making and avoiding the problem of corporate governance failure and imbalance due to the relative dispersion of equity.
At the same time, Article 8 of the Measures also raises the conditions for financial institutions to be the main investors of consumer finance companies, with total assets of not less than RMB 500 billion or its equivalent in freely convertible currencies at the end of the most recent fiscal year, compared to RMB 60 billion previously. Correspondingly, non-financial enterprises, as the main investors of consumer finance companies, have operating income of not less than RMB 60 billion or the equivalent in freely convertible currencies in the most recent fiscal year, compared with RMB 30 billion previously. At the same time, the stipulation of "undertaking not to transfer the equity of the consumer finance company held by it within the year" was abolished.
Article 6 of the Measures also clarifies the conditions for applying for establishment, and the registered capital shall be a one-time paid-in monetary capital, with a minimum limit of RMB 1 billion or the equivalent in freely convertible currency.
In terms of business scope optimization, the above-mentioned person in charge said that on the one hand, the "Measures" distinguish between basic business and special business. Seven businesses, including "issuing personal consumption loans" and "issuing non-capital bonds", will be included in the basic business, and four businesses, including "asset-based business", "fixed-income investment business" and "consulting services related to consumer finance", will be included in the special business.
In addition, non-main and non-essential businesses will be cancelled. In view of the high professionalism of insurance sales and the large number of related complaints and disputes involved, consumer finance companies basically did not carry out such business, so the business of "selling insurance products related to consumer loans" was cancelled.
As for the reasons for the revision of regulatory indicators, the above-mentioned person in charge said that based on the needs of risk prevention and control, consumer finance companies cooperate with financing guarantee companies, insurance companies and other institutions as a means of risk mitigation for loans. However, some consumer finance companies have long relied too much on the development of this model, relaxed the substantive review of the borrower's credit qualification level, lacked independent risk control capabilities, and also faced the risk that the guarantee company would not be able to compensate.
In addition, in terms of regulatory indicators, Article 60 of the Measures requires that the capital adequacy ratio, provision coverage ratio and loan provision ratio of consumer finance companies shall not be lower than the minimum regulatory requirements of the State Financial Supervision and Administration for commercial banksThe balance of interbank offers shall not be higher than 100% of the net capital;The liquidity ratio shall not be less than 50%;The leverage ratio must not be less than 4%. However, the State Administration of Financial Supervision may make appropriate adjustments to these indicators according to the needs of prudential supervision.
*: China ** Daily.
Editor: Kobayashi.