New rules governing the sale of wealth management products (WMP) in China will soon be launched by the Chinese banking regulator following a five month feedback period for its draft iteration.
The final version of the “Wealth Management Company Wealth Management Product Sales Provisional Administrative Measures” (理财公司理财产品销售管理暂行办法) was unveiled by the China Banking and Insurance Regulatory Commission (CBIRC) on 28 May.
The new rules are scheduled to officially come into effect on 27 June, with CBIRC setting a six month transitional period for wealth management companies that fall within its remit.
According to CBIRC the goal of the Measures is to “strengthen regulation of institutions that sell wealth management products, and drive the healthy and sustainable development of wealth management product sales and the wealth management market.”
Key provisions of the Measures include:
- Banning sellers from solely or prominently using absolute figures or interval figures to display performance comparison benchmarks in promotional and advertising materials. This rule is expected to prevent sales staff or sales organisations from advertising expected yields for wealth management products (WMP), helping to remove “implicit guarantees” on the instruments and expedite a transition towards net asset value products.
- Banning any non-financial institutions and individuals from engaging in the sale of WMP’s unless licensed by China’s financial regulatory authorities. This prohibition is expected to temporarily bar non-bank financial institutions and online platforms from engaging in the agency sale of WMP’s. The measures do permit wealth management companies and deposit-accepting banking sector financial institutions to engage in agency sales.