A Research On Regulatory Subjects For Financial Consumer Protection In China

In2007, the global financial crisis triggered by American subprime crisis brought significant impact on economic development of the world. After this financial crisis, all governments and international organizations gained a common understanding, that is the protection on financial consumers, which plays an important role in maintaining international financial system’s long term stability. Therefore, governments of different countries launched a serial of measures aiming to strengthen macro-prudential supervision and prevent systematic risks. They share an outstanding common characteristic of strengthening protection on financial consumers. The United States, as the country that implements most profound reform after subprime crisis, has launched its financial regulatory reform program in2009, which was known as the largest financial regulatory reform since the1930s. The establishment of financial consumer protecting organization is one of the cores in this plan. Though China didn’t suffer fierce direct impact from subprime crisis, the frequently seen cases in which financial consumer’s interests were violated and were reported by the media have put forward to realistic requirements on establishing consumer’s interests protecting mechanism in the field of financial market in China. With acceleration of mixed operation management and financial innovation, financial products and services are becoming difficult to distinguish. The financial products are becoming more complicated and risky while the financial consumers’interests are suffering more fierce violation caused by consumer’s insufficient experience, professional knowledge and learning competence. Currently, China still focuses on financial organization’s stable operation and maintaining orderly financial market without enough attention to the protection of financial consumer’s interests. Therefore, the consumer interest protection is far behind financial innovation. Although the People’s Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission have established financial consumer protection mechanisms respectively, there are still defects of cross responsibility, unclear authorization and regulatory gaps under current regulatory pattern. Therefore, this paper researches into financial consumer’s interest protection in China from the angle of regulatory subjects.In China, financial consumer is not a legal term. Firstly, this paper, on the basis of financial consumer conception, tries to define financial consumers from the aspects of behavior subject, behavior target, and behavior classification. After comparing with the setting of financial consumer protection organizations in China, UK, Canada, the United States and Australia, this paper, from the angle of financial regulatory organization relationship, summarizes two kinds of patterns based on current setting of financial consumer protecting regulatory subjects, the joint regulatory subject and special regulatory subject, and performs comparative analysis for these two regulatory subjects from the aspects of regulating cost, independence and effectiveness. Secondly, this paper, by analyzing the setting of American Consumer Financial Protection Bureau and explaining the current financial consumer protection situation in China with examples, points out the main existing issues for financial consumer protection under current China’s regulatory subject mode:the shortage of legislation, independent financial consumer protection organization, gaming subject of financial consumers and effective financial consumer’s interests compensating channel. Finally, this paper puts forward to suggestions for improving regulatory subject of the financial consumer protection in China:1. improve the protection of financial consumer under current regulatory subject mode;2. establish regulatory organization equivalent to American Consumer Financial Protection Bureau for the sake of integrating the financial consumer protection responsibilities from different financial regulatory organizations to form a special organization. This responsibility can be undertaken by the People’s Bank of China. In other words, this special organization can be set under the direct supervision of People’s Bank of China and can be provided with the functions of establishing regulations, handling complains, researching consumers and educating consumers. In addition, it can strengthen international cooperation to develop financial consumer protection.