Research On Legal System For Consumers Of Bank’s Wealth Management Products

Personal wealth management business of China starts from2004. Since then, Chinesewealth management operation has been developing for more than10years. According to thestatistics of2013released by Banking Association, at the end of2012, at least233banks aremanaging wealth management business, and the fund-raising size is about50trillion RMBevery year. The wealth management products during the period of continued existence isabout32000models, and the fund size during the period of continued existence is more than7.1trillion RMB. It is becoming increasingly common that Chinese people buy bank’s wealthmanagement products, but the financial conflicts are also increasing. The report of CCApointed out that bank’s wealth management products are becoming one of the core areas offinancial conflicts. The influence of2007financial crisis is still lasting. One important reasonthat causes the crisis is that some countries didn’t pay attention to the consumer financialprotention, but were pursuing the economic efficiency. So constructing and improving theleagal system of consumer financial protection is becoming one of the goals of supervisionorganizations after the crisis. So regulor organizations must focus on the consumer financialprotection of bank’s wealth management products, in order to regulate bank’s wealthmanagement operation.There are four parts in this essay. The first part presents the concepts of bank’s wealthmanagement products and consumer. Firstly, this essay simply presents the concept of bank’swealth management products from the angle of the abroad, domestic and CBRC. Secondlythis essay defines the connotation of financial consumer, pointing out that now the concept offinancial consumer is not one law concept, but just one law-theory concept, and there is atrend in theory that the concept of investors in disadvantaged position is becoming theconcept of financial consumer gradually. And it points out that as far as bank’s wealthmanagement products are concerned, the buyers of these products are investors in essence,but the law should see them as financial consumers, and notes that Private Banking Clientsand HNWIs should be excluded from the scope of consumer of bank’s wealth managementproducts. The second part presents the process of evolution of law about the protection ofconsumers of bank’s wealth management products. By analyzing the regulations andnormative documents of CBRC about bank’s wealth management products, the article notesthat there are four stages in the domestic protection for consumers of bank’s wealth management, that including blank period, initial stage, systematic periods and refined period.By analyzing the focus of the lagal protection for consumers of bank’s wealth managementproducts and the specific measures taken by CBRC, the essay drew a conclusion that theCBRC’s provisions of the legal protection for the consumers of bank’s wealth managementproducts focus on three aspects, namely, the bank’s oligation of information disclosure,suitability obligations and the resolution mechanism of financial disputes about wealthmanagement products. The third part evaluates and analyses status of the legal protection forconsumers of bank’s wealth management products, noting that China’s system supply focusedmore on preventing the systematic risks probably caused by the wealth management operationof banks than on strenghtening the legal protection for the consumers of bank’s wealthmanagement products, thus there being some imperfections in the obligations of bank ofinformation disclosure, suitability and the resolution mechanism of financial disputes causedby bank’s wealth management operation. The last part puts out some suggestions forimproving the mechanism of legal protection for the consumers of bank’s wealth managementproducts. Refining the standards of information disclosure for bank, and establishing thethird-party trusteeship mechanism and the civil compensation regim is to improve theinformtion disclosure regim of bank. The provisions of the suitability principle for conumersof bank’s wealth management products could be improved by establishing the legal protectionframework centered on the suitability principle, unifying the evaluation standards for theconsumers of the wealth management products and constructing the-third-party rating system.The dispute resolution mechanism for consumers of bank’s wealth management products canbe refined by improving the complaint-handlig mechanism, and establishing a highly linkedhandling mechanism directed at complaints and a newly substituted complaint resolutionmechanism.