In a move to uphold order in the financial market, the National Financial Regulatory Administration has drafted the “Interim Provisions on the Management of the List of Severely Dishonest Entities (Draft for Comment)” (hereinafter referred to as the “Interim Provisions”) and recently opened it for public feedback.
Strengthening Credit-Based Supervision
The draft aligns with directives from the Central Committee of the Communist Party of China and the State Council, including the “Opinions on Improving the Social Credit System” and the “Guidelines on Further Enhancing the Disciplinary Mechanism for Dishonesty to Build a Long-Term Integrity Mechanism.” The 31-article proposal outlines measures to regulate severe dishonesty through credit supervision, deterring illegal activities and maintaining market fairness.
Key Measures in the Draft
1. Strict Criteria for Inclusion
Financial institutions and their employees may be added to the severe dishonesty list if they face administrative penalties or regulatory enforcement actions from the financial regulator due to egregious violations that severely disrupt market competition or social order.
2. Management Measures for Listed Entities
Based on existing laws and policies, the draft specifies the regulatory actions that authorities may impose on entities included in the list.
3. Transparent Listing and Delisting Procedures
The provisions detail the processes for adding and removing entities from the list, including a three-year automatic removal mechanism. Safeguards such as prior notice and objection procedures ensure the protection of stakeholders’ rights to information and defense.
4. Credit Restoration Mechanism
Entities that rectify misconduct and mitigate negative impacts may apply for early removal after one year. The draft clarifies eligibility criteria and review timelines for such requests.
Call for Public Feedback
The National Financial Regulatory Administration invites opinions from all sectors of society. It will carefully review feedback to refine the Interim Provisions before finalizing and implementing them.
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