Legal Analysis Of Consumer Trusts

Under the situation that traditional trust products are facing sluggish business models and falling profits,the general development of Internet finance has provided space for the innovation and development of trust businesses,and consumer trusts have emerged.Consumer trusts are designed to allow consumers to enjoy favorable consumer prices from suppliers while also entrusting trust companies to conduct wealth management investments in consumer properties,and to link trust companies,consumers and suppliers in close contact with each other and obtain them from them.income.Since CITIC Trust introduced the first consumer trust products in 2013,other trust companies have followed suit and covered medical care,education,and health care.However,there are controversial issues at the same time that this innovative trust product is buoyant,and there are risks that conflict with current legal regulations in different models.The first chapter of this paper first analyzes the legal relationships between the three main subjects of trust products: consumers,trust companies and suppliers,and elaborates the operational structure of various consumer trusts.Then the three types of consumer trusts are introduced from the perspective of trust assets.This leads to two parts of consumer trust property-consumer funds and security deposits.Trust companies have less discretion in the use of consumer funds,usually delivered to suppliers to purchase goods or services.In contrast,margin accounts for a much higher proportion,or even more than half of the total amount.The operation of the margin portion is the main feature of the consumer trust products and is also the keyto innovation.Trust companies or suppliers use this amount of money to make investment gains and realize promised investment income and remuneration for consumers.However,the deposit is also the focus of the controversy on the legality of consumer trusts.The operating model of margin in different trust products has led the academic community to question the legitimacy of consumer trusts.According to the specific product structure of different consumer trust products,the operation of the margin can be divided into three modes: the trust company runs the margin;the supplier runs the margin;the supplier transfers a single fund trust to the trust company.The second,third and fourth chapters of this paper respectively analyze the different illegal risks existing in these three modes of operation.In the first model,margins are mainly used by trust companies for low-risk investments such as bank wealth management and trust products.Although the trust company exercises separate and independent management of the trust property of each investor in its exercise,the consumer portion of these properties essentially points to the same supplier,and the margin may also point to the same investment direction.The characteristics of the fund trust also existed in the regulations for breaking qualified investors.In the second model,the trust company does not participate in specific investment matters,and only acts as a channel for monitoring the use of funds and settlement of funds,avoiding the risk of forming a collective fund trust,but the suppliers responsible for fund operations have illegally funded or illegally solicited the public.The risk of deposits.The third mode is when the suppliers gather funds and then hand them over to the trust company to set up a single fund trust plan for investment.However,the legal prerequisite is that the supplier has legal qualifications to absorb public funds,that is,when funds are raised through advance payment.This involves the relevant legal provisions for prepaid cards.If the supplier issues a single-use prepaid card to consumers,its initiative or entrusting the trust company to invest in real estate,stocks,securities,etc.,is in violation of relevant laws and regulations.If a supplier issues a multi-purpose prepaid card to consumers,it is also illegal to use the funds to set up a trust plan for a trust company to invest in gains.It can be seen that consumer trusts are bound to be subject to many restrictions by operating in a legally compliant manner under the existing legal framework.Returning to the economic benefits originally created by consumer trust products,we cannot deny the positive aspects it brings to the development of consumers,suppliers and trust companies.If only because of the lack of laws and regulations that match these financial innovation activities,consumer trust products It will have to face the consequences of the suspension,and the parties who have invested a lot of resources and funds will suffer greater losses.This will not only prevent the illegal status of illegal fundraising and other illegal activities,but will also hinder the further promotion of financial innovation activities.Instead of adopting a repressive approach,you may wish to face it with a development attitude.Therefore,market regulators should comply with changes in the times,exempt consumer trusts from complying with the “Qualified Investor” regulations,clarify the status of suppliers as the only money collectors,and establish pre-acquisition trust systems so that relevant business innovations can be followed.The healthy development of consumer trusts explores the right path for development.