Investor Suitability In The Sales Of Financial Products Of Internet Financial Platforms

The development of Internet information technology has created the possibility for the emergence of Internet financial platforms,which have also expanded and revolutionized the financial services business of traditional financial institutions while developing at a rapid pace,of which the sale of financial products is an important module.The sale of financial products on the Internet financial platform has the characteristics of easy operation,low transaction cost and timely information feedback,which attracts a large number of investors.Investors of financial products in the Internet financial platform have the dual identity of platform users,so the platform should not only be subject to the constraints of investor suitability at the level of financial product sales,but also need to pay attention to the use of user data and information or compliance issues in the process of processing.However,at present,due to the lack of special regulations,the regulation of financial product sales business of Internet financial platforms is still not in place,and because of the long tail nature of Internet finance,a large number of users do not have high investable assets,compared to investors in traditional financial institutions,in general,also generally have a lack of investment experience,weak risk resistance,awareness of rights,etc.Therefore,if the platform ignores investor suitability construction,the legitimate rights and interests of such investors are more likely to be violated,and it is also more difficult to proactively defend their rights and interests.This leads to the low cost of violation of the platform to ignore the construction of investor suitability,more likely to ignore the fulfillment of investor suitability obligations,the ultimate damage is still the interests of the majority of online financial products investors,forming a vicious circle.Moreover,the current Internet financial platform in their own investor suitability construction has indeed exposed many problems,the formation of explicit and implicit infringement of the rights of users,more platforms actually do not have the relevant business qualifications or licenses,but still to investors to promote,sell financial products,and even illegal crime,known as chaos.Therefore,there is an urgent need to regulate the Internet financial platform investor suitability construction,which is also an important way to protect the legitimate rights and interests of investors and strengthen investor education.The body of this paper is divided into four chapters.The first chapter introduces investor suitability and the basic contents of Internet financial platforms,and takes Lufax and Ant Group as examples,listing the investor suitability construction practices of these two Internet financial platforms with high market shares in the process of selling financial products.The common law system and the civil law system have different theories of investor suitability,but they both believe that the trust relationship between investors and financial institutions is the theoretical basis of the investor suitability system,and in this regard,the common law system has developed the "agency theory","special circumstances theory" and "signboard theory".In this regard,the common law system has developed the "agency theory","special circumstances theory" and "signboard theory",while the civil law system starts with the principle of good faith and credit to prove it."The former is a prerequisite for the latter,but because of the complexity of financial transactions,"buyer pays" also requires that both parties enter into a contract of free will,otherwise it is a contract for investors who are at a disadvantage in terms of information.Otherwise,it is an injustice to the investor who is at a disadvantage in terms of information.China’s current documents that provide for an investor suitability system include the "Securities Law",the "New Regulation on Capital Management" and the Minutes of the National Court Work Conference for Civil and Commercial Trials,which represent the views from the legislature,the regulator and the judiciary authorities,and show that all three parties are aware of the importance of investor suitability and the importance of investor protection.The institutional regulations on investor suitability issues in overseas mature capital markets are ahead of China’s,both from the perspective of the timing of the documents and the level of perfection of the rules.The main contents of the investor suitability obligation include the obligation to know the customer,the obligation to know the product,the obligation to match the investor with the financial product,and the obligation to inform and explain,among which the matching obligation is the core of the suitability obligation.The model of Internet financial platforms can be roughly divided into two categories,one is the financialization of Internet platforms,and the other is the Internetization of financial institutions.Since Internet finance is faster,more extensive and more concealed than traditional finance,traditional financial regulation is overstretched in the face of Internet finance,and Internet finance should be regulated in a targeted manner.As an important subject in Internet finance,the Internet financial platform is an important grip for regulating Internet finance.Many platforms are in fact actively exploring ways to optimize the construction of investor suitability,for example,Lufax and Ant Group have taken advantage of information technology and data processing to try to solve common problems in investor suitability through big data analysis technology,artificial intelligence technology and blockchain technology.Chapter 2 mainly lists the problems in investor appropriateness construction in online financial product sales services of current Internet financial platforms.On the one hand,there are old problems inherent in investor appropriateness construction,which have not yet been solved even with the emergence of new technologies.These problems are mainly: the evaluation of the investor matching segment focuses only on the risk rating of the financial product itself,but ignores the total number of transactions that can lead to equally serious consequences;and the failure to fulfill appropriateness obligations simply because the investor is a qualified investor.On the other hand,there are new problems arising from the use of new technologies,mainly: the relevant regulatory documents do not directly address the business of selling Internet financial products,there is only one special management approach introduced,but it is still in the consultation stage,and the pace of legislative push regulation lags behind other major sectors of Internet finance;traditional financial regulatory instruments are ineffective in the face of the new sector in Internet finance,and the rules are not complete.Internet finance platforms use the referral module to advertise financial products that do not match them to investors,which actually forms a persuasion to investors and an implicit violation of the platform’s investor suitability obligations;platforms use the concealment of online transactions to conceal illegal practices.Chapter 3 is the proposed solutions to the problems raised in Chapter 2.In the solution of old problems,facing the problem of "quality" rather than "quantity" in the practice of investor suitability,the consideration of transaction volume can be incorporated into the construction of investor suitability,and this step is most economical to be realized by the platform based on the existing technology and system;facing the problem of neglecting the fulfillment of suitability obligations to qualified investors,the platform should strengthen its understanding and realize that investor suitability applies to all investors,and qualified investors are only the classification of investors,and there are many diversified classification standards besides.In terms of solving new problems arising from the use of new technologies in Internet finance,regulatory documents should be issued to address the characteristics of the sale of Internet financial products,regulatory measures should be introduced to adapt to the new Internet financial industry,and platform recommendation modules should be included in the appropriateness construction to manage unreasonable channeling behavior of platforms.The fourth chapter is to summarize the whole paper and draw conclusions.