BEIJING, Dec. 27 (Xinhua) — The People’s Bank of China (PBOC), the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange carried out regulatory talks with Ant Group on Saturday.
The financial regulators identified major problems in Ant Group’s business operations and asked the group to come up with a rectification plan and set a timetable as soon as possible to fix the problems.
The following are the key takeaways of the talks according to the remarks of the deputy head of the PBOC Pan Gongsheng in response to media questions.
BACKGROUND OF THE TALKS
In December, a meeting of the Political Bureau of the Communist Party of China Central Committee, and the annual Central Economic Work Conference both called for strengthened antitrust efforts and the prevention of disorderly capital expansion, putting forward clear requirements for financial management in related areas.
The country’s financial regulators will follow these requirements, supervise market entities in the financial sector in accordance with laws and rules, strictly investigate and punish violations of laws and regulations, rein in disorderly capital expansion, and safeguard fair competition and financial market order.
Since its establishment, Ant Group has played an innovative role in developing financial technologies, and improving the efficiency and inclusiveness of financial services.
However, as an influential enterprise in the fields of fintech and the platform economy, Ant Group must comply with national laws and regulations, integrate its development into the overall development of the country, and live up to corporate social responsibility.
The main purpose of the talks was to urge and guide Ant Group to follow market-driven and law-based principles, implement requirements regarding financial supervision, fair competition and protection of consumers’ legitimate rights and interests, and standardize the operation and development of its financial businesses.
ANT GROUP’S OPERATING PROBLEMS
The group’s major operating problems include flaws in its corporate governance mechanism and poor legal awareness, flouting regulatory compliance requirements, foul play for regulatory arbitrage, leveraging market dominance to exclude competitors, and hurting consumers’ legitimate rights and interests, which led to consumer complaints.
The Ant Group has been asked to return to its original business as a payment services provider and enhance transparency of transactions, and the group is strictly prohibited from unfair competition.
The company should carry out individual credit reporting business that is compliant with laws and regulations, and should protect personal data privacy.
The group must set up a financial holdings company in accordance with laws, strictly implement supervision requirements and ensure capital sufficiency and legality of relevant businesses.
The company has also been urged to improve corporate governance and strictly rectify illegal credit loans, insurance, wealth management and other financial activities in accordance with supervision requirements.
It must also operate securities and funds businesses in accordance with laws and regulations, strengthen governance of securities institutions and carry out asset securitization businesses in compliance with regulations.
Meanwhile, Ant Group should strengthen risk management and control, maintain business continuity and normal business operations, and ensure quality financial services for the public.
Financial regulators will keep close communications with Ant Group and listen fully to its opinions.
POLICY ORIENTATION FOR FUTURE SUPERVISION
Financial regulators will continue to encourage and support fintech companies, as ever, to make innovations on the premise of serving the real economy and complying with prudent supervision.
Fintech companies must foster a sense of strictly abiding by financial supervision, a market awareness of resolutely safeguarding fair competition and a service awareness that places the protection of consumers’ rights and interests at its core.
In terms of policy orientation for future supervision, Pan listed the following several principles: resolutely breaking monopolies, rectifying, investigating and punishing unfair competition to safeguard a sound market order; putting all financial activities under supervision in line with laws and rules, with all financial businesses licensed, and exercising zero tolerance for all kinds of law-breaking behaviors; protecting intellectual property rights in line with laws, upholding entrepreneurship, inspiring market entities’ vitality and social creativity, and enhancing the core competitiveness of the country’s fintech enterprises in the global market.
Fintech and internet platform enterprises are fresh business forms that innovate and evolve rapidly, taking on many new features. Financial regulators will continue to strengthen international exchanges and cooperation in supervision, while jointly promoting innovations of financial technologies as well as the healthy development of the financial system.