The World’s Legislative Reference On Protecting Financial Consumers For China

The sub-prime crisis catastrophe began in2007. The world’s economy sufferedan unprecedented devastation, which stimulating academics to re-examine thefinancial regulatory system and mode. The divergence between the EU and the USAexisted during the G20summits.These differences also indirectly influenced the core economies on domesticreform. On the institutions reforming part, the EU set up the European System ofFinancial Supervisors. It consists of European Systemic Risk Board and EuropeanSupervision Authority in charge of the macro supervision and micro supervisionrespectively, considering intertwined problems on Europe’s sovereign debt crisis andsystemically important financial institutions risks.From the year2012, the EU began to construct a set of financial consumer onlinedispute resolution mechanism according to Proposal for a Directive on alternativedispute resolution for consumer disputes and Proposal for a Regulation on onlinedispute resolution for consumer disputes. The new online dispute resolutionmechanism will integrate and unify the existed ADR mechanism in the EU. In the September of2012, the EU Markets In Financial Instruments Directive IIcame into force and improved the system of market transparency. MiFID II expandedin market transparency area to include dark pools of transparency of the organizedtrading facilities. Providing investment advice of the basic elements to investors byfinancial institutions is put forward by the independent assessment consideringwhether the behavior is fit for investors with a long-term mechanism. MiFID II alsogives Member States and relevant European financial regulators powers in thecorresponding legal situation to ban financial products trading.After analyzing the deep methods which were taken by the EU and compare themethods on different aspects, I take the example of the EU on the financial legislationreform after the financial crisis for the purpose to draw lessons for China.In the reform of financial consumer protection system in China, two kinds ofreforming mode should be taken. The first mode is to integrate and improve graduallyon the existing but weak system. Especially the know your customer regime andinformation disclosure system. The second mode is to build a totally new andthree-dimensional system on the blank part (i.e. online dispute resolution mechanism)to integrate existing alternative dispute resolution mechanism scheme.