By CHEN Jing, ZENG Yanglin
China is set to overhaul its financial regulatory regime, with the creation of a new body to oversee the entire financial sector, excluding securities.
The China Financial Regulatory Administration (CFRA) will report directly to the State Council. The CFRA will absorb all the duties of the current China Banking and Insurance Regulatory Commission (CRIRC).
In addition, the CFRA is tasked with protecting consumers and regulating financial services, currently the responsibility of the People’s Bank of China. Investor protection, now under the jurisdiction of the China Securities Regulatory Commission (CSRC), will also become the work of the new authority.
Currently, oversight of the financial sector is divided between the banking and insurance regulator, the securities commission and People’s Bank of China.
As well as banking and insurance, the CRIRC had responsibility for securities and monetary policy. The banking and insurance sectors have outgrown the initial purpose of the CRIRC and the new entity will have wider and stronger powers.
Perhaps most importantly, the new body will replace local financial regulators. These bodies, set up by provincial governments, have rules and powers that differ from place to place. Regulation of local banks, as well as newer forms of financial institutions including fintech companies, will be consolidated.
The CRIRC was founded in 2018 after the merger of two previous bodies that regulated banking and insurance separately.
The proposal was submitted to the National People's Congress for deliberation and is expected to be passed.
