China seeks to revise banking regulation law to strengthen consumer protection

BEIJING -- Chinese lawmakers on Tuesday began the second reading of a draft revision to the banking supervision and regulation law, which aims to better protect consumers' rights and interests.

The draft revision was submitted for deliberation at the ongoing session of the Standing Committee of the National People's Congress (NPC), the country's top legislature, which opened Tuesday.

The second-reading draft further strengthens banking regulators' responsibilities for protecting consumers, improves relevant mechanisms, and introduces specific rules to address illegal practices such as employees of banking institutions misappropriating customer funds.

It proposes establishing and improving systems to protect banking customers' rights and interests, as well as mechanisms to handle consumer complaints and resolve disputes through multiple channels.

It also specifies prohibited practices by banking institutions and their employees that infringe on consumers' legitimate rights and interests, such as forcing customers to purchase bundled products or services.

Given the significant differences among banking institutions, the draft stipulates that banking regulators should implement classified and tiered supervision based on factors including the type of institution, scale of assets and liabilities, risk level and systemic importance.

To improve the legal framework for defusing financial risks in the banking sector, the draft clarifies the responsibilities of central and local authorities in handling risks, strengthens risk-response measures, and specifies the role of institutions such as deposit insurance fund management agencies in risk resolution.

The current law on banking supervision and regulation was implemented in 2004, and the draft revision was first submitted to the NPC Standing Committee for review last December.