The requirements cover the accuracy of information disclosed and cooperative arrangements between FIs and internet platform companies.
The PBOC (People’s Bank of China), CBIRC (China Banking and Insurance Regulatory Commission), CSRC (China Securities Regulatory Commission) and CNIPA (China National Intellectual Property Administration) have jointly issued draft rules to regulate online marketing of financial products.
The rules are aimed at standardising how financial products are marketed online, protecting the rights and interests of financial consumers, and ensuring fair competition in the market, the regulators said.
The rules put forward specific requirements on the online sale and marketing of financial products – covering marketing content, behavioural norms, cooperation between FIs and internet platform companies, and legal responsibilities.
These rules seek to ensure that FIs and internet platform companies do not sell or induce consumers to buy financial products that do not match their financial status and risk-bearing capacity.
It is forbidden for any institution or individual to provide online marketing for illegal financial activities such as illegal fundraising, virtual currency trading, or FX trading. Online marketing is also not allowed for private equity products and non-public securities offerings, the rules say.
All marketing and publicity content should use accurate and common language to fully disclose information about financial products. Such disclosures should not contain false, fraudulent or misleading content.
FIs are required to establish a review mechanism to ensure compliance of their online marketing and promotional content with legal and regulatory requirements.
Under the rules, “harassment marketing” and nested sales are also prohibited. Nested sales involve non-bank payments institutions providing marketing services and accepting payments for financial products such as loans and asset management products.
The use of names and images of academic institutions, industry associations, and professionals as a sign of an endorsement of financial products marketed online is also prohibited.
The rules specify that new online channels such as live broadcasts, self-media accounts, and internet groups may be used to market financial products, however marketers should be employees of FIs and possess relevant financial qualifications.
This means social media influencers will not be allowed to market financial products via live broadcasts, a common practice in the securities industry.
Where FIs and internet platform companies cooperate in the online marketing of financial products, FIs shall assume responsibility for the management of marketing cooperation activities.
FIs will have to secure written agreements with internet platform companies and establish a management mechanism for enabling and exiting such cooperative arrangements.
Internet platform companies are required to carry out marketing activities in accordance with their contracts, and they must not confuse their brands with those belonging to FIs.
The rules, published here, are open for comment until 31 January 2022.
Once the rules take effect, FIs and internet platform companies will have six months to complete rectification of any non-compliant online marketing activities.