20 Jan 2016
Shanghai Suspends Internet Finance Platforms Registration
As the risks of new wealth management platforms such as internet finance have been exposed more and more frequently, government authorities across the country have begun to tighten their grip at source. Shanghai has recently suspended the registration of financial companies such as online finance platforms, and institutions with business scope covering financial information service and financial outsourcing etc are also put on the suspension list.
The Shanghai Municipal Administration of Industry and Commerce has temporarily stopped the registration of internet finance companies since 4 January 2016. According to the company registration agencies, as long as words such as “finance” and “outsourcing” are included in the business scope, no approval is granted to the registration.
Starting from 2015, provinces and cities all over the country have strengthened their administration of online finance and offline wealth management platforms. Although official supervisory measures have not yet been introduced, action has been taken to rein in registration and advertising. For instance, in September last year Ningbo called a complete halt to online finance and offline wealth management platform advertisements. Then in November the registration of financial companies with enterprise name or business scope containing such words as wealth management, investment management and consultancy, or asset management was suspended, while the establishment of their branch companies was not processed.
On 28 December 2015, the China Banking Regulatory Commission began to canvass public opinions on the Interim Measures for Administration of the Business Activities of P2P Lending Information Intermediaries (Draft for Comment). The interim measures clearly state that P2P (peer-to-peer) lending will be subject to administration by way of the record filing system. After the power of administration has been delegated to the local financial administration departments, various localities have started to straighten out their line of thought and look into methods of supervision.
After that, Chongqing issued the Circular on Strengthening the Work of Preventing and Controlling Peer-to-Peer Online Lending Risks on 29 December 2015 stipulating 10 measures. One of them is that existing platforms must submit a written report on their self-examination and self-correction acts to the municipal finance service office before the end of March 2016, giving detailed descriptions of the management and risks of their operations. The Circular also states clearly that organisations which have yet to launch P2P online lending business and newly established online platforms must continue to stop their P2P online lending business before the competent state department has officially promulgated measures for the supervision of P2P online lending. In other words, even if these companies can proceed with registration in Chongqing, they still cannot start their business for the time being.
In Shenzhen, commercial registration of the name and business scope of newly set up internet finance enterprises has been suspended since 1 January 2016.