Research Of The Legal Regulatory Of Commercial Factoring Company

Commercial factoring companies have experienced rapid development since the launch of the commercial factoring pilot in 2012,while non-compliance and irregularities have also appeared,and we have seen frequent occurrence of risk events.The imperfect legal system of commercial factoring,especially the lack of commercial factoring regulatory legislation,is a major problem that has impaired the development of commercial factoring companies in a long time.Regulations for commercial factoring companies have long taken the form of department regulatory documents,local regulatory documents and other policies.The content of regulations is imperfect,with the effectiveness level being low,and is not in a clarified and uniform form across the country.In 2018,the Approval for the Establishment and Alteration of Commercial Factoring Companies was added to the Negative List for Market Access,which means a commercial factoring company is deemed to be a financial service institution that needs to meet the conditions for license or qualification,and was marked with a symbol of "The effectiveness level of the basis for establishment is not sufficient,so the management measures are needed to be temporarily included in the list”.This is a proof of the prominent problem of the lack of basis for establishment.In the same year,the regulatory functions for commercial factoring companies was transferred from the Ministry of Commerce to the China Banking and Insurance Regulatory Commission(CBIRC),and the regulatory policies became more and more strict.In2019,the CBIRC issued the “Notice of the General Office of CBIRC on Strengthening the Supervision and Management of Commercial Factoring Companies” to unify the scope of business and some regulatory index;however,nothing was specified in terms of market access,exit,business rules,regulatory measures,and behavioral penalties etc.,and there was a stronger call for a unified regulatory approach.The CBIRC also stated that it was stepping up the formulation of regulation for commercial factoring companies.Having studied the development and evolution of current regulatory regulations,this paper takes the regulation for commercial factoring enterprises as the starting point,and points out after analysis that the problems in the legal system of commercial factoring regulation cannot be completely solved only by the competent authority formulating a regulatory measures.Regulation involves market access permits,measures for financial prudential regulation,and administrative penalties that require laws or administrative regulations to confirm the effectiveness level.Without the authorization or stipulation of laws or regulations,the competent authorities have no right to set them on their own.Therefore,in view of the problems in the legal system of commercial factoring regulation,this paper proposes a regulatory system that combines the three-tier regulatory requirements of "first,confer powers and functions by laws and regulations;second,formulate unified regulations by the competent authorities;and finally,self-regulation across the industry" and recommends that laws or administrative regulations should be passed first to specify the market access permits,regulatory measures and administrative penalties,and improve the regulatory authority of the competent authorities;then,from the perspective of unifying the regulations by competent authorities,this paper analyzes the regulatory requirements in terms of the effectiveness level,access standards,and definitions of factoring business etc.,and puts forward opinions and suggestions.In terms of business rules,in combination with the latest provisions of the Civil Code,this paper analyzes and discusses the compliance issues for future accounts receivable that have long impaired the factoring business;finally,this paper proposes some suggestions and specific measures to strengthen the supervision and regulation of self-discipline across the industry.The regulation for commercial factoring companies is not just for pure supervision.Commercial factoring has special functions and meanings under our country’s financial system.Hoping that through the improvement of the legal system of the regulation for commercial factoring companies,commercial factoring companies can be guided to develop in a more standardized and healthy way and to better play their role in serving small,medium and micro enterprises and serving the real economy.In addition to the Introduction and Conclusion,this Article consists of three parts:The first part discusses the necessity of legal regulation for commercial factoring companies,by analyzing the functions and existing problems of commercial factoring companies in China.The second part,through studying the evolution of commercial factoring regulations,puts forward and analyzes the existing problems in the legal system of the regulation for commercial factoring companies.The third part,in view of the problems in the legal system of the regulation for commercial factoring companies,proposes a three-tier regulatory system that combines "first,confer powers and functions by laws and regulations;second,formulate unified regulations by the competent authorities;and finally,self-regulation across the industry",and analyzes in detail the problems that are to be addressed in each layer of the legal system,and puts forward some suggestions.