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Live-streamers promote products online at the 2nd China-Central and Eastern European Countries (CEEC) Expo in Ningbo, Zhejiang province, on June 9, 2021. Live-streaming e-commerce has become an increasingly popular way to shop during the pandemic, but the sale of financial services has caught the attention of regulators. Photo: Xinhua
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China steps up crackdown on financial products promoted on social media, requires industry licence

  • A draft regulation in China would bar unlicensed sales of banking, insurance and securities services through live-streaming and social media
  • The booming live-streaming e-commerce market has led to influencers selling all kinds of products, including highly regulated financial services like loans
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Ann Cao
Ann Caoin Shanghai
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China’s finance regulators have proposed new curbs on online marketing for financial products and services in Beijing’s latest efforts to set boundaries between the financial sector and internet platforms.

A draft regulation from seven of the country’s regulators, including the People’s Bank of China and Ministry of Industry and Information Technology, specifies that only those licensed with “relevant industry qualifications” are allowed to promote financial products and services through live-streaming or social media, a decision that would illegalise sales of banking, insurance and securities services by most online influencers. The regulation was published on Friday on the central bank’s website.

The regulation, which is expected to go into effect after a month of soliciting public feedback, is set to end a lucrative part of the live-streaming business, where influencers and celebrities have been making good money by promoting complicated financial products, including insurance policies and wealth management schemes.

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Since live-streaming e-commerce emerged as a popular way of shopping online during the pandemic, the types of products peddled through these channels have spanned virtually every possible category, from cosmetics and groceries to highly regulated services such as loans, which has invited government scrutiny.

Regulators have previously warned of risks associated with live-streamers selling financial products. In a notice published by the China Banking and Insurance Regulatory Commission in late 2020, the finance watchdog highlighted fraudulent and misleading claims as the main risks related to live-streamers without qualifications.

The new draft takes this a step further by making it harder to promote even legal products online.

The draft comes as Beijing has been seeking to slow technological disruptions to the financial system amid growing concerns about systemic risk. Ant Group, the fintech affiliate of Alibaba Group Holding, is now going through restructuring under regulatory oversight to bring its microcredit and consumer credit services under conventional financial regulations. This process kicked off months after its initial public offering was scuttled by Chinese regulators at the end of 2020. Alibaba owns the South China Morning Post.
The new draft regulation stipulates that nonbank payment institutions, which refers to services such as Ant’s Alipay and Tencent Holdings’ WeChat Pay, cannot promote financial products, including loans and asset management products, as payment options to consumers.

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Last April, regulators summoned 13 fintech platform operators including Tencent, Baidu, Meituan and TikTok owner ByteDance, ordering them to rectify online payment services, which included taking measures to “disconnect payment tools and other financial products” and ensuring the “prudent development” of loans and insurance businesses.
Last Tuesday, Ant Group said it will cease operations this month of Xianghubao, the world’s largest mutual aid platform, which has provided financial aid to about 180,000 sick people over the past three years while operating in China without a licence.
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