The China Banking Regulatory Commission, Ministry of Industry and Information Technology, Ministry of Public Security and the Cyberspace Administration of China jointly issued on 17 August 2016 the Interim Administrative Measures for the Business Activities of P2P Lending Information Intermediaries ("Measures"), provisional rules aimed at regulating the P2P lending sector in China.
The Measures aim at bringing order to a sector that has grown rapidly in China but drawn concern, predominately in regard to the legitimacy of certain P2P platforms and alleged fraudulent activity. Notably the Measures outline a number of prohibitions for P2P platforms, which inter alia bar them from offering guarantees, selling financial products such as insurance or trust products on a commission basis, conducting equity crowdfunding, or exaggerating how profitable their businesses are.
The Measures have prohibited P2P platforms from conducting several types of high-risk finance business and from conducting business that does not conform to the nature of the P2P platform as an information intermediary - most of which are presently conducted by several P2P platforms - such as selling P2P financing projects in offline banks or insurance companies, providing loans for investment in the stock market and off-field funding, and so on, explain Kevin Wang and Lilith Chen of CMS, China.
Commentators hope that the Measures will remove the regulatory grey area within the Chinese P2P lending sector. The grey area may generally be interpreted as a lack of specific supervision authorities and a lack of specific legal basis and requirements for the P2P lending sector, say Wang and Chen. From the perspective of supervision authorities, the Measures specify that the China Banking Regulatory Commission shall be the competent regulatory authority for P2P lending business; the Ministry of Industry and Technology Information shall be responsible for supervising the telecom business involved in P2P lending activities; the Ministry of Public Security shall be responsible for combating financial crimes concerning P2P lending businesses; and the State Internet Information Office shall be responsible for supervising the financial information services and internet information content.
Affected platforms have until August 2017 to implement the Measures.
(The above article was firstly published in the August 2016 issues of e-finance&payments law&policy.