By King & Wood’s Finance Group

After seeking public comments in a wide range and holding several times discussions with bankers and lawyers, on 9th October 2011 CBRC promulgated the Rules on the Distribution of the Wealth Management Products of the Commercial Banks ("CBRC Rules"). The CBRC Rules maintains major content of the Interim Rules on the Commercial Bank’s Wealth Management Business to the Individuals and the Guidelines on Risk Management on the Commercial Bank’s Wealth Management Business to the Individuals in 2005, at the same time, CBRC Rules provides new requirements in key fields. In the current banking market, the funds is seriously short, and the interest rates for the deposit are very low and the means of investment are very limited, therefore, banks and their clients will pay much more attention to the sales of the wealth management products.

Among other requirements, CBRC Rules provides:

Regulatory Scope: CBRC Rules covers both wealth management products to be sold to individuals and institutional investors. Therefore, the commercial banks need to adjust their procedure and management in relation to the sales of the wealth management products to institutional investors.

Supervision Mode: CBRC Rules requires commercial banks to submit more reporting documents and materials to the regulators than those required in the previous rules. However, the supervision mode changes from the approval and report requirement to the report requirement for all products. This means that commercial banks should be more cautious and responsible in the design of the wealth management products.  

Internal Procedures: CBRC Rules provides more comprehensive and detailed requirements on commercial banks’ internal control system in relation to wealth management products, such as authorization to be granted to the branches, clients complaint handling procedures, etc.   These new requirements reflect the disputes and lawsuits in this business area in the latest several years.

Sales Behavior and Documents: CBRC Rules provides more detailed and stricter requirements on the sales behavior and business documents. For example, both of the banks and the clients shall maintain the sales documents signed by the clients. This article stems from the previous lawsuit related with the wealth management product. CBRC Rules provides that the sales documents include: Sales Agreement, Product Description, Risk Disclosures, and Notice on the Client’s Rights and Interests.  The banks need to adjust their business documents.

Fees: CBRC Rules provides that, if a bank intends to adjust the fees in relation to the sales of the wealth management product, it may do it only after making disclosure pursuant to the relevant requirements. If a client does not agree such adjustment, the client is entitled to require the bank to redeem such products.  We have reviewed the business documents of a lot of banks, and we noted that few documents conformed to the requirements in CBRC Rules.  The banks need to adjust their business documents accordingly.



For further information on the matters covered in this newsletter, please contact:


Liu Zhigang
King & Wood
40th Floor Office Tower A, Beijing Fortune Plaza
7 Dongsanhuan Zhonglu
Chaoyang District Beijing 100020
Tel: +86 10 5878 5126
Fax: +86 10 5878 5599


Chen Yun
King & Wood
16-18/F, One ICC, Shanghai ICC,
999 Huai Hai Road (M),
Shanghai, 200031,
Tel: +86 21 2412 6052
Fax: +86 21 2412 6350