BEIJING (Reuters) - China’s cabinet and major financial regulators on Thursday published details of rules aimed at stamping out fraud and illegal fundraising in the country’s fast-growing online finance sector.
The State Council document, which dates from April, provides guidelines and more far-reaching oversight for regulation of online financial activity, including peer-to-peer (P2P) lending, crowd-funding and third-party payments.
The goal is to provide “market order” and safeguard the “vital interests” and “legitimate rights” of financial consumers, an unnamed senior official told the state-run Xinhua News Agency.
China’s banking regulator in August issued the first set of regulations under the guidance. Those rules were aimed at cracking down on fraud in the country’s $93 billion peer-to-peer (P2P) lending market.
Beijing has abandoned its earlier hands-off approach to overseeing online financial services following a slew of scandals, frauds and high-profile P2P failures.
The documents published on Thursday by government bodies, including China’s central bank, banking regulator and securities regulator, gave detailed fresh rules to tighten regulations on online asset management services, third-party payments, crowd-funding and advertisements on the online financial sector.
The rules prohibit P2P companies from engaging in a range of businesses, and require the platforms to maintain distinct sub-accounts for their clients, while utilizing mandated third-party depository to hold funds.
The rules also forbid P2P platforms from engaging in asset management activities, debt or equity transfers, or marketing of high-risk securities.
Real estate development enterprises and real estate intermediaries also are barred from using Internet platforms to engage in financial businesses without relevant licenses.
In addition to stricter regulation on the P2P industry, the authorities also laid out rules to overhaul other online finance services, including third-party payment channels, crowd-funding platforms, asset management and advertisement.
The clean-up of the sector involves 17 government departments, including China’s central bank and banking regulator, the central propaganda department, and the Supreme People’s Court, the People’s Bank of China said.
($1 = 6.6685 Chinese yuan)
Reporting by Matthew Miller; Editing by Richard Borsuk