China still lacks unified financial protection standards for consumers, and with internet finance booming, the existing protection mechanism needs an overhaul, writes Gu Lei, a researcher at the Center for Microfinance Initiatives & Networks of Renmin University of China, for
The Beijing News.
Gu suggests consolidating the financial consumer protection arms of the central bank, securities, insurance and banking regulators into one. The existing system, where each of the four has its own consumer protection arm, has performed poorly, Gu argues. The regulators have often passed the buck to each other, which together with fragmented standards and a lack of coordination has harmed consumer interests. Moreover, the regulators have a variety of consumer dispute resolution channels, delaying lawmaking to protect financial consumers, he explains.
Gu suggests a unified “Bureau for Financial Consumers’ Protection” be set up to enforce consistent standards, and the establishment of a unified dispute resolution mechanism. He adds that such an agency should be put under the People’s Bank of China, which would be in charge of advancing protection initiatives and supervising implementation.
Though such an agency will improve the protection of financial consumers significantly, there’s no panacea in this field, and constant reform and exploration are needed, the researcher concludes.
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