Reflections On The Perfection Of The Suitability Rule In China

With the development of financial market, financial products orservices are more and more complicate and professional. In therecommendations of financial products or services, since financialinstitutions often show their professional ability to customers and investorsthemselves lack the knowledge and experience of investments, more andmore investors tend to make investment decisions depending on theprofessional judgment of financial institutions. Therefore, in order to avoidinjury of the investors’ interests by unsuitable recommendations offinancial institutions in China, we should perfect the suitability rule tomake it effectively perform the function of investor protection. On the basisof collation and classification of the relative regulations on the suitabilityrule in China, this paper analyzes the subsistent problems of the value goaland identification of the system and puts forward the preliminaryconception and proposal to perfect the suitability rule from the perspectiveof comparison and reference of foreign law as well as combining ournational conditions.This paper has three parts: the preface, text and conclusion. Amongthem the text is divided into the following five chapters:In the first chapter, firstly the author makes a brief introduction of theemergence and development of the suitability rule in United States, the European Union, British and Japan, and summarizes the characteristics anddeveloping trend in the evolvement of legislation. Secondly the authorillustrates the scope of application in practice and theory of differentcountries and areas, and then clears the regulating object of the suitabilityrule. Finally, on the basis of the above discussion as the starting point, theauthor makes the concept discrimination of the suitability rule and clearsfoundation of analysis in this paper.In the second chapter, the author makes the collation and classificationof the relative regulations on the suitability rule in securities, bank and trustindustries, especially in securities industry. The author points out that theauthority level of the suitability rule is low and responsibility provisions onfinancial institution violating the obligation of the suitability rule areinsufficiency, as well as lacking relief approaches of investors. On a deepreflection of the subsistent system in China, the author finds that theseproblems mentioned above are resulted from the deviations in the cognitionand identification of the suitability rule.In the third chapter, the author analyzes the necessity and rationality ofthe improvement of the suitability rule and illustrates the realistic basis,system space and theoretical support of the suitability rule to be animportant rule of investor protection system. Then from the perspective ofthe whole and connection, the author discusses the relationship between thesuitability rule and the other investor protection rules and clears theidentification and function of the suitability rule in the investor protectionsystem.In the fourth chapter, on the basis of comparative analysis, the authorput forward the specific conception of perfecting the suitability rule.Investor classification system and investor access system provide standard and foundation for the suitability rule, but they are not the core content. Asan important part of investor protection system, the suitability rule shouldbe perfected on the obligations of financial institutions and civil liability ofviolations as well as clearing the relief foundation for investors to claimright.In the fifth chapter the author aims to improve the relief approaches ofinvestors. On the basis of evaluation of judicial application in United Statesand Japan, the author works out some legal norms which can be used as thelegal basis and puts forward proposals to perfect the corresponding reliefapproach on the analysis of the advantages of alternative dispute resolutionmechanism in the application of the suitability rule and the protection ofinvestors in Unite States and British.