30 May 2016
Beijing Prohibits Advertisements Promising Guaranteed Principal and Yield for Wealth Management Products
The Beijing Administration for Industry and Commerce (BAIC) and 10 other departments recently issued a document indicating that joint efforts will be made to strengthen supervision over advertisements for wealth management products in illegal fund-raising starting from 15 June 2016. Under the new regulations, advertisements for these products may not promise guaranteed principal and risk-free or guaranteed yield in express or implied ways, and may not carry commitments for future outcome and yield or relevant circumstances.
The administrative departments for industry and commerce will strengthen the routine monitoring and supervision of advertisements for wealth management products and payment services, step up efforts to investigate and prosecute illegal advertising, expose typical false and illegal advertising, and notify the relevant units about their advertising monitoring as well as investigation and prosecution of cases in a timely manner. The document demands that the content of advertisements tallies with the actual situation and does not exceed the scope of business approved by the registration and licensing authorities. Non-financial enterprises may not design and release on their own advertisements containing projected yield, duration and other factors for financing products. An advertisement must clearly show the name of the financial product and explicitly indicate the nature of this product.
The document also requires that advertisements must be truthful and law-abiding and must not deceive or mislead investors. They should carry reasonable indication or warning of possible risks and risk liability, prominently display the warning message that "you should exercise caution when making investment and beware of risks", and may not promise guaranteed principal and risk-free or guaranteed yield in express or implied ways.
Advertising for wealth management products may not contain any of the following seven types of content:
1. Content pertaining to the absorption of deposits or issuance of loans without the permission of the departments concerned in the name of investment management, investment counselling, mortgage intermediary, credit guarantee, pawn brokerage, etc.
2. Content pertaining to commitments for future outcome and yield or relevant circumstances and promise of guaranteed principal and risk-free or guaranteed yield in express or implied ways, except otherwise prescribed by the state.
3. Using the name or image of academic institutions, industry associations, professionals or beneficiaries to give recommendation or proof.
4. Making false propaganda on the return, safety and other circumstances of wealth management products to deceive or mislead investors.
5. Content containing exaggerated or one-sided advertisement of financial services or financial products and false or exaggerated statements about past performance without providing objective proofs.
6. Content citing untrue or inaccurate information, statistical data, research finding, digest and quotations as reference.
7. Content explicitly prohibited in the Advertising Law, Circular on Issues Relating to the Strengthening of Advertisement Censorship and Supervision in the Handling of Illegal Fund-raising and other laws and regulations relating to financial management.