On The Consumer Protection Issue In Commercial Bank’s Financial Product

Recent years have witnessed the increase of people’s income with rapid economicdevelopment, however, how to preserve and increase the value of wealth, and how to resistthe growing inflation have become a common concern of all people. Nowadays, with thetrust industry having strict entry system and the stock market being in the doldrums, thefinancial products designed by commercial banks with high returns and low risk haveattracted more attention from the public. However, China’s financial industry is ofseparated supervision, with all major banks treating financial products as regulatoryarbitrage tools, in addition, most financial products are complex in design, thus there existthe serious information asymmetry and infringement of consumers’ rights and interests infinancial products market. It has become an inevitable topic for all supervisionorganizations and banks that how to protect consumers’ rights and interests on financialproducts in terms of institution, and how to prevent adverse selection of bad moneydriving out good money.This paper focuses on consumer protection on financial products issued bycommercial banks, which will be divided into four parts:In the first part, the concept of financial products will be described as a foundation,and then the example of “The Case of Selling Private Financial Products in HXB (Hua XiaBank)” will be taken to reveal current problems exist in financial products market fromthe perspective of "excessive sales" and “lacking risk disclosure”.In the second part, the paper will analyze the causes for infringement of consumers’rights and interests of financial products in respects of inadequate legislation, vague legalrelation, imperfect dispute settlement mechanism, investors’ non-rationality, operationmode of the capital pool of financial products and the education deficiency of consumers’.The third part of this paper mainly introduces the consumer financial protection experience of foreign countries, highlighting the system of Consumer Financial ProtectionBureau (CFPB) under US common law system, British financial ADR system andJapanese Statute Law against the civil law system in protecting the rights and interests offinancial consumers.The fourth part of this paper brings forth innovation. First of all, according todomestic present status and overseas experience, it rebuilds macroscopic law of financialproducts from the point of legal relation of financial products, and of changing the modeof regulation. Then, from micro perspective, it puts forward to strengthening theexplanation obligation and standardizing compatibility of financial products sales. Finally,in terms of market competition, it proposes to bring in private capital, to break theoperation mode of capital pools, to encourage Internet financial innovation, and toenhance financial education for financial consumer.