BEIJING (China Daily/ANN): China’s financial watchdogs needed Ant Group, the financial technology arm of the country’s e-commerce giant Alibaba, to rectify its key business lines in order to comply with laws and regulations to ensure fair market competition and protect the interests of customers, according to the central bank on Sunday (Dec 27).
After talking to the group one day earlier, the regulators raised five rectification criteria for Ant Group’s main services. It is stating that the company should return to and concentrate on the payment market. It boosts the transparency of transactions and prevent unfair competition.
Pan Gongsheng, vice-governor of the People’s Bank of China, the central bank, said in a written interview published on the bank’s website that his private credit information service should apply for a licence and protect the privacy of personal data.
In addition, Ant Group was required by financial regulators to create a financial holding company with sufficient capital and compliance with the transactions of the related parties.
In order to ensure that its credit, insurance and wealth management services function in compliance with laws and regulations, the company needs to improve its corporate governance, said Pan. Its securities and fund companies’ financial services, as well as its asset securitization business, should also be in compliance with the relevant laws.
A meeting with Ant was held on Saturday by the PBOC, along with the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission and the Foreign Exchange State Administration.
The PBOC noted some wrongdoing by the fintech community. For example, “flouting regulatory compliance requirements” “conducting arbitrages against regulations”. It is also excluding rivals in the same business sector by taking advantage of its dominant market position.
The legitimate rights and interests of consumers have been damaged by some of Ant Group’s actions, triggering customer complaints, Pan said.
In an announcement on Sunday, Ant Group said it approved the conditions and would set up a special working group to deal with rectification and will meet the regulators’ instructions throughout the process.
It promised that the costs faced by customers and associated financial institutions would not increase. According to the group, market changes would neither affect customer offerings nor lower levels of risk reduction.
A commentary in the Economic Daily on Sunday said that it is the “right time” for financial management departments to formulate rules and improve regulations for the advancement of financial technology.
The actions suggested that financial regulators will further standardise the development of emerging financial undertakings, avoid financial risks and preserve fair competition and order in the financial market,”The actions indicated that financial regulators will further standardise the development of emerging financial businesses, prevent financial risks, and maintain fair competition and financial market order,”
Ant Group was urged by financial watchdogs to make rectification plans and map out clear time schedules. It is for strengthening risk controls to ensure that its businesses and daily operations continue as usual, Pan, the vice-governor of the PBOC, said.
Pan also stressed that in the future, financial regulatory policies would follow the principles of breaking monopolies, fixing and investigating unfair competition, covering all financial activities in the oversight system of the country, providing ‘zero tolerance’ for illegal actions and protecting property rights in order to improve the core competitiveness of Chinese financial technology companies.
Financial regulators, headed by the central bank, first met with Ant on Nov 2, before top-level Chinese policymakers said at the annual Central Economic Work Conference that they will step up anti-monopoly regulation and avoid disorderly capital expansion.
According to analysts, the recorded content of the talks showed a trend towards improving the supervision of fintech firms, while policies will continue to encourage their technologies under prudential regulations in order to better serve the real economy.
According to experts, tightening oversight would help more competitive business organisations, who can then engage in fair competition and encourage the healthy growth of the industry.