The State Administration of Financial Supervision has recently announced the issuance of new measures aimed at strengthening the supervision of consumer finance companies in order to prevent financial risks and promote the high-quality development of the industry. The “Measures for the Administration of Consumer Finance Companies” will come into effect on April 18, marking a significant step in enhancing the regulatory framework governing consumer finance.
One of the key provisions of the new measures is the increase in the minimum shareholding ratio requirements for major investors of consumer finance companies. The main investor must now hold at least 50% of the total share capital of the company, up from the previous requirement of 30%. This change is intended to consolidate shareholder responsibilities, improve decision-making efficiency, and maintain a moderate level of competition in the market.
Additionally, the “Measures” optimize and adjust the business scope of consumer finance companies to ensure a focus on their core functions. Certain non-main and non-essential businesses will be cancelled, and differentiation between basic and special business activities will be enforced.
In terms of corporate governance, the new measures outline regulatory requirements for party building, shareholder obligations, salary management, and related transactions. Furthermore, the measures strengthen risk management by introducing new indicators for credit risk, liquidity risk, operational risk, information technology risk, and reputation risk management.
The “Measures” also include provisions to protect the legitimate rights and interests of financial consumers. Consumer finance companies are required to establish an overdue loan collection management system that prohibits the use of unfair means such as violence, threats, and harassment. Additionally, cooperative institutions must be subject to restraint management to prevent infringement on consumer rights.
Experts in the financial industry have praised the new measures for filling regulatory gaps and providing a more comprehensive framework for the consumer finance industry. The focus on risk management and consumer protection is seen as crucial for ensuring the orderly development of consumer finance and promoting high-quality industry growth.
Overall, the issuance of the “Measures for the Administration of Consumer Finance Companies” represents a proactive step by the State Administration of Financial Supervision to enhance supervision, mitigate risks, and support the sustainable development of the consumer finance industry.