Study Of The Financial Consumer Protection Laws

In china, financial consumption is a newly emerging field with duel attributes of finance and consumption in comparison with traditional patterns of consumption. There're not yet sound governing regulations until now, but meanwhile a great potential of developing could be implied insofar. With the popularity of the concept of financial consumption and various modern financial services and products, finance has no longer been monopolized by institutions, but also common people could enjoy the convenience and benefits it yields. In the real life, banks, insurers, security companies and other financial institutions market continuously such an overwhelming variety of products that the financial market has assumed a flourishing scene. However, we could find considerable hidden dangers concealed in the prosperity. As the designer and provider of financial products, financial institutions as a rule dominate the operating platform and the market, and in this sense, the absolute price makers. In financial activities, especially when in the event of a financial dispute, financial institutions tend to abandon the fair and equitable market principles, take advantage of their dominant positions to encroach on the legitimate rights of comparatively weak consumers and maximize their self interests. Undoubtedly, consumers'faith in the market and their expected active participation are of essential significance to its further development and prosperity. To sustain the stability and prosperity of our financial industry, we must give full value to protect the interests of the weak group of financial consumers. However, while giving a glimpse into our current laws and regulations, it's not hard to find that our present laws and regulations have made few provisions for the protection of financial consumers' interests, and the remaining few exist just in the "law of the PRC on the protection of consumers' rights and interests", which originally aims at protecting traditional consumers, and in some financial laws which emphasize on maintaining the security and efficiency of financial institutions. Besides, the vacancy of financial consumer protection agency, the vague distribution of relevant departments' responsibilities and the blocked way of relief of consumers' disputes heighten the immensity of this problem, which all together result in the reality that in our country the protection of financial customers' rights could not be authentically implemented. Therefore, this essay will center around the corresponding legal practice in the United States and England, combined with our current situation and problems, and employ the methodology of normative analysis, comparative analysis, historical analysis and legal interpretation, to study the legal issues of protecting financial customers' rights and interests.Besides the introduction, the essay is divided into five chapters.The first chapter is about the definition of legal concept related with financial consumer protection. Combining a brief introduction towards some primary concepts (i.e. financial consumption, financial consumers, financial products), and a comparative analysis of various existing theories in the theory circle nowadays, this chapter will gradually present the legal meanings of the protection of financial consumer's rights and interests. Given the extraordinary nature of financial consumption, this essay argues that we should break through many of the limitations posed by traditional theory in defining the aforementioned concepts. Particularly we should make a breakthrough with the traditional concept of consumer in defining financial consumer, and comply with the international trend of integrated legislation in the financial industry, that is to say, to incorporate all the social members (including natural and artificial persons) who purchase financial products or services from the banking industry, security industry, insurance industry and other financial businesses to the category of financial consumers.The second chapter is about the theoretical foundations of financial consumer protection. From the viewpoints of workable competition theory, substantial contractual justice theory and incompleteness of law, this chapter will systematically pry into the theoretical foundations of financial consumer protection in terms of economics, jurisprudence and financial supervision, in order to provide an adequate theoretical basis for this research.The third chapter is about the content of financial customers' rights and interest protection. The main content of financial customer protection lies in ensuring the realization of financial customers' rights through binding financial institutions' behaviors to reasonably carry out their obligations. This chapter first concisely defines the content of financial consumers' rights and highlights three core rights among them: the right to know, the right of privacy and the right of claim. Secondly, this chapter, out of consideration of protecting financial customers' rights, concisely introduces three major obligations financial institutions should bear, which cannot be found in normal businesses. Since information asymmetry, which is prevailing in financial market, is the main cause of weak financial customers and repeated violations to them, this essay holds that ensuring financial institutions perform their obligations upon financial information and if not, undertake corresponding legal responsibilities thereof is key to guaranteeing the realization of financial customers' rights and also is the core concepts of the protection of financial customers' rights. Financial institutions' obligations that fall into this category include but not limited to obligation of explanation, obligation of disclosing information and obligation of reasonable persuasion.The fourth chapter is about international legislation on the protection of financial consumer's rights and interests. This chapter applies an approach of comparative analysis of different countries' legislation. From the three perspectives of administrative authority and its function, content of its legislation and dispute settlement mechanism, this chapter will separately take a deep insight into the legislation of the United States and Britain on the subject of financial consumer protection, with the expectation to provide guidance and reference for our own countries' future legislation.The fifth chapter is about the status quo of our countries' financial consumer protection and some improvement proposals. After analysis of the status quo of our financial consumer protection, this chapter will cover the existing problems over legislative system, administrative supervision and dispute settlement mechanism of our financial consumer protection, as well as a brief analysis of its causes. Based on this analysis and by drawing on the experience of other countries' advanced legislation, the last part of this essay will propose some suggestions on improving our countries'protection mechanism:establish gradually a sound legislative system of financial consumer protection by coordinating existing laws related to financial services and introducing the financial services act at the right moment, improve the financial supervision mechanism, smooth the dispute settlement channel, build an assessment system of risk-bearing capacity of financial consumers and develop an education mechanism. This essay considers that internal factors play a decisive role in the development of everything, compared with the improvement of the external institutional environment of the protection of financial consumer, it shall be one of the important measures of consummating our current Financial Consumer Protection System to improve the financial literacy of financial consumer by fostering the Financial Consumer Education Mechanism, which should arouse highly public attention.