On 6 August 2023, the State Administration for Market Regulation and the Standardisation Administration of China jointly issued rules for internet-based finance, named Information Disclosure of Online Individual Consumer Loans in Internet Finance.
There are specific requirements and further guidance on information disclosure that apply to all online lenders. The standards are designed to help lenders mitigate their compliance risks around information disclosure. They deserve the full attention of market players.
This article summarises the key points on compliance. It covers the basic principles of information disclosure and the disclosure of lenders’ company profiles, and website and business information.
True, accurate, complete and timely disclosure. Lenders shall, within the specified time limit or as required by the user, disclose true, reliable and accurate information, thoroughly and comprehensively, which shall include everything that affects consumer decision making.
Observe objective facts. Information disclosure shall be grounded on objective facts or fact-based judgments to accurately reflect objective circumstances.
Use accurate, concise, rigorous and plain language that is easy for consumers to understand. Lenders shall disclose important information of interest to consumers in a prominent manner to attract their attention, explain key terminologies, and properly confirm that consumers have received complete information.
Chinese version prevails. Lenders shall ensure consistency between the Chinese and foreign-language versions. Should there be any discrepancy, the Chinese version shall prevail.
Full name and abbreviation. Lenders shall disclose their Chinese names and abbreviation, and any foreign ones, consistent with their registration with the market regulatory department.
Registered capital, consistent with the registration with the market regulatory authority. A limited liability company shall disclose the capital contribution subscribed by all shareholders. A joint stock company set up by promotion shall disclose the total share capital subscribed by each promoter. A joint stock company set up by public offer shall disclose the total share capital that has actually been received.
Place of registration, date of establishment and business address. Lenders shall disclose the business address that is registered with the market regulatory authority, the date of establishment and the actual business domicile.
Business licence, customer service number and other contact information. Lenders shall disclose the licence (or registration certificate) for the individual online consumer lending business, the issuing (registration) authority, date of issue and validity period. Lenders shall also provide dedicated phone numbers for customer service and complaints, an email address and other contact information.
Lenders shall disclose their official website, corresponding telecom business licence, mobile app, social media accounts, other channels of consumer lending services and information around their security assessment and certification.
Specifically, the official website address should be the main domain name. The website itself should include the corresponding licence number of the telecom business. All social media accounts should be listed. The mobile app name and download link should be provided. Information security assessment and certification should include agencies, results and validity period.
Product application. According to the standards, lenders shall disclose product application information in all aspects, including but not limited to:
- The product name, type and scope of co-operation with institutions;
- Their service conditions (application conditions);
- The relevant online lending contract, service agreement and other arrangements (key terms and potentially material-adverse terms relating to the interests of borrowers shall be notified in a noticeable and understandable manner);
- Service fees and billing standards (any information of material interest to borrowers shall be informed in a prominent manner, and lenders must ensure borrowers’ acknowledgement and agreement);
- User privacy policies (collection and usage of personal information shall be informed prominently, and the collection method, scope of use, protection, storage method and accessibility to any third parties shall be clarified); and
- Account security knowledge and risk alerts.
Customer service. Lenders shall provide information such as notices, account statements, credit limit operations, interest rate and fee adjustments, error handling and misconduct correction. They shall notify borrowers about how to update loan and account information, regularly disclose loan information and service fees or provide an inquiry channel, and promptly notify adjustments to credit limits, credit limit calculations, interest rates and fees. Lenders shall also provide information on the correction of errors and misconduct, such as interest (fee) errors and unauthorised use of the borrowers’ information.
Business operation. Lenders shall disclose any access and reporting of financial credit information, and the institutions that legally provide financial credit services. They shall prominently suggest that late payments or defaults will be recorded as borrower misconduct; inform borrowers about the trigger conditions of reporting to relevant institutions; and disclose the management, subject and manner of the collection, and the code of conduct.
The standards provide guidelines for lenders to follow, and also rules against which self-examination of information disclosure can be conducted. In view of some open-ended expressions in the standards, lenders should also strictly follow the information disclosure requirements of other regulatory and formative documents and, on this basis, follow guidelines provided in the standards, and reasonably plan for the future information disclosure in relevant fields.
Guang Zhenming is a senior partner at Joint-Win Partners