An Analysis On The Legal Issues Of Financial Products Of Bank Trust And Loans

The financial product of bank trust and loans means that banks provide loans to enterprises indirectly through trust companies. The concrete operational forms are as follows: Firstly, Commercial Banks issue financial products to raise funds from the society. Then, Commercial Banks, as the only client, give all the raising financial funds to trust companies. At last, trust companies, as trustee, loan the funds to the designated enterprises in the form of loans. The legal relationship of this kind of financial products is complex, with a lot of risk both in law system and actual operation. Take Anxin Trust dispute case for an example, the ambiguity of rights and obligations between banks and trust companies is not good for protecting the interests of investors and maintaining the stability of financial market. So, to clear the nature of the financial products of bank trust and loans, sort out the related legal system relationship and reflect the current regulatory philosophy and ways, have significant meanings in promoting the healthy development of financial products of bank trust cooperation in the next step and protecting the interests of investors and facing the trend of mixed business running.Financial products of bank trust and loans exist a lot of risk in legislation and operating. The root cause is because that the ambiguity of the legal nature of the financial products makes all parties involved in the business ill-define their own rights and obligations; and that all parties have deviation towards the understanding and implementation of the rights and responsibilities, especially the defects of the legislative background and agency supervision of separate business running, which makes the related laws and regulations of this kind of financial products uncoordinated and even conflicting , some with repeated supervision and some without supervision. Thus, the current regulatory authorities, bank and trust companies should take active measures to prevent risk from their own perspective respectively. Under the condition of strict supervision, banks can appropriately carry out trust business with the state's permission and shouldn't take the action of trust by the name of entrust; or trust companies can appropriately conduct the activity of raising funds by public offering to provide conditions for the equitable development of trust business. At the same time, the government should make out the operating procedures for all kinds of financial products to make laws and regulations more interoperable.To promote the development of financial products of bank trust cooperation, in the aspect of macro system, government should strengthen financial legislation and supervision, update the legislation and regulatory philosophy, coordinate the legal system, and encourage financial innovations. In the aspect of micro operation, bank and Trust Corporation should set up a rational risk-controlling system, improve the congress system of information disclosure and beneficiaries; and strengthen the system of internal self-regulatory mechanism of all financial corporations. In addition, in the process of issuing financial products of bank trust and loans, the government should strengthen the measures of supervision, and actively carry out mixed business running pilot to meet the needs of developing financial industry.