Research On Legal Issues Of Financial Consumer Protection Regulation

One of the important reasons for the outbreak of the subprime crisis in 2008 is the ineffective regulation of financial institution’s market abuse and indifference to financial consumers protection. Therefore, to strengthen the protection of financial consumers and investors is an important content of financial regulatory reform in the post-crisis era. Improving China’s financial consumer protection system, which should be based on international trends and lessons drawing from the advanced experience of developed countries, is one of the problems that should be paid more attention during the perfection of China’s financial regulation system. Moreover, it has very important significance to the sound development of financial industry and the safety and stability of the financial system.Through comparative analysis, history analysis and other methods, the paper discusses the basic theory and core elements of financial consumer protection regulation in detail. Based on the international trend and advanced experiences of financial consumer protection regulation reform, the author puts forward suggestions on how to improve China’s financial consumer protection regulation.Besides the introduction and conclusion, the paper is divided into four parts.The first part discusses the basic theory of financial consumer protection regulation, which includes the definition and necessity of financial consumer protection regulation. Financial consumer protection regulation is defined as for the purpose of protecting financial consumer rights and interests, regulators who exercise the legal rights implement the specific system of financial consumer protection and supervise the financial services of compliance management in order to prevent and reduce the phenomenon that rights and interests of financial consumer is damaged. As an important part of a country’s financial regulatory system, there are both closely relation and essential difference between financial consumer protection regulation and prudential regulation, financial conduct regulation. Financial consumer protection is not only beneficial to alleviate the information asymmetry between consumers and financial service providers, but also to overcome vulnerable position of financial consumers. Moreover, it is meaningful to maintain stability of financial system.The second part analyzes the structure and power of financial consumer protection agency. To achieve financial consumer protection, regulators should supervise financial institutions that carry out laws and regulations of financial consumer protection. As a result, financial consumer protection regulator is the basis and core of financial consumer protection mechanism. The institutional structure of financial consumer protection, which exercised either by prudential regulators or by multiple regulators or specialized regulators, depends on a country’s financial regulatory system and financial industry development level. On the other hand, in order to ensure financial consumer protection agency effectively perform its function of consumer, we must ensure the independence of regulators and specify the legislative power, supervisory power and enforcement power.The third part concretely analyzes the specific rules of financial consumer protection, which include information disclosure, treating consumer fairly, dispute resolution mechanism and financial education. Information disclosure is defined as regulation method that on the premise of maintaining the principle of freedom of contract, the government appropriately intervene in financial market in order to solve information asymmetry problem between consumers and financial institutions. Treating consumer fairly is a kind of behavior that in order to protect and safeguard consumer’s legal rights, financial institutions fully implement and fulfill service contract and written commitment. Dispute resolution is an important mechanism which not only it can implement the law of financial consumer protection, but also financial consumer can get adequate relief. Through information, instructions and objective suggestions, financial education improves the consumer’s recognition about financial products and financial concepts. Therefore, it can enhance their ability to identify financial risk and make good financial decisions.The fourth part discusses China’s present situation and perfection of financial consumer protection regulation. China has no special laws in terms of financial consumer protection. The related provisions on consumer protection disperses among other laws, regulatory rules and documents. In addition, the current legislation does not leave the financial consumer protection as the first goal of regulation. Although setting up relevant functional departments of financial consumer protection in People’s Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission China Insurance Regulatory Commission, independence is not strong and powers are not clear. Longitudinal spilt regulation is^also easy to cause regulatory overlap and regulatory loopholes. Based on the advanced experiences of developed countries, the author puts forward that China should formulate special financial consumer protection laws and confirm the basic elements of financial consumer protection regulation. Secondly, we should ensure the independence of related functional departments of financial consumer protection regulators and give them clear functions and power. Lastly, China should adopt the method of principles-based regulation and rules-based regulation to coordinate the specific rules of financial consumer protection.