The Research On The Suitability Rule In The Sale Of Financial Products

With the development of the financial market, more and more professional financial products have been created variously and complicatedly in financial sector. In such background, the recommendation made by financial products sellers to investors typically become the key of making a investment decision by such investors .Generally, due to lack of financial information and professional experience, ordinary investors are not as accomplished as the sellers of financial products, in collecting, selecting and differentiating relevant financial information, and make reasonable investment decisions as the case maybe. In China's current financial practice, for the purpose of earning brokerage or carrying on a better marketing performance, the financial products sellers usually recommend investors purchase quite a few high risk financial products which are beyond the investor's assumption. In such cases, it is apparent that the investor's benefits would not have been sufficiently protected merely by the sellers performing risk disclosure obligations as the investors still couldn't know and understand entirely the characteristics and risks of the relevant financial products or whether they are able to invest in. Therefore, most countries and regions with a prosperous financial market have introduced Suitability Obligation into relevant financial markets and such Rule has been conformed to by financial products sellers in process of recommending relevant financial products to investors. At the present time, even though there are a few scattered regulations with regard to such Rule issued by relevant Chinese authorities, compared to the Suitability Obligation Rules of developed countries, it is necessary to improve Chinese Suitability Obligation Rules.In view of such situation, this paper makes a comparative study for the Suitability Rule as follows: introduction of this paper explains study objective, scope of study, study method and structure of this paper. Chapter1 elaborates the relevant definitions, and general issues of the Suitability Rule; Chapter 2 elaborates the necessity and theoretical cornerstone of establishing of the Suitability Rule; Chapter 3 introduces and explains relevant legislation and practice in other countries and regions (such as the USA and Japan) with respect to the scope, regulation object and specific contents of the Suitability Rule; Chapter 4 reviews all the regulations with respect to such Rule and summarizes a few shortcomings of such laws and regulations; Chapter 5 provides a few suggestions for the establishment of the Suitability Rule in China.The innovation of this paper is mainly reflected in the following two aspects: first, this paper, for the first time, theoretically clarifies a few significant and basic issues related to the Suitability Rule, for example, this paper clarifies the necessity of such Rule through rectifying the asymmetry of estimation ability and avoiding conflict of interests between investors and financial products sellers; second, different from other papers which failed to make a comprehensive study for all respects of such Rule, this paper summarizes the essence of laws and regulations issued by a few developed countries and regions, and in view of Chinese financial practice, from the definition, judgment criteria for suitability, the object for such Rule, the administrative and civil liability in violation of such Rule, puts forward a series of suggestions for how to establish relevant legal system for such Rule.