Improve the internal control mechanism to prevent and defuse risks——
The wealth management industry builds a financial firewall
In order to promote the compliant operation and continuous and stable operation of wealth management companies, and to perform the management duties of “entrusted and on behalf of others” in accordance with the principles of good faith, diligence and due diligence, the China Banking and Insurance Regulatory Commission recently issued the “Administrative Measures for Internal Control of Wealth Management Companies (Draft for Comment)” (hereinafter referred to as the "Measures"), and solicit public opinions.
The person in charge of the relevant department of the China Banking and Insurance Regulatory Commission said that the "Measures" are an important institutional guarantee for wealth management companies to perform their entrusted management duties, and an important way and a powerful way to achieve effective supervision.
At present, the issuance and implementation of the "Measures" in the new period and new stage of the transformation and development of wealth management companies is conducive to unifying the regulatory standards for similar asset management businesses, enhancing the compliance awareness of wealth management companies, establishing and improving investor protection mechanisms, and promoting the wealth management industry to form a good development ecology .
Form a unified internal control standard
This year, the "Guiding Opinions on Regulating the Asset Management Business of Financial Institutions" ("New Asset Management Regulations") was officially implemented after the transition period ended, marking my country's asset management system is becoming more and more perfect in the top-level design.
Under the unified supervision standards, the large-scale asset management structure has formed a "one network", and the sub-industries such as bank wealth management business have gradually entered a new stage of standardized operation, and the operation of asset management institutions has become more stable.
In terms of the development pattern of wealth management companies, since the promulgation and implementation of the Measures for the Administration of Wealth Management Subsidiaries of Commercial Banks in 2018, a total of 29 wealth management companies have been approved for establishment, of which 25 have been approved to open for business.
As of the end of March 2022, the total balance of wealth management products of banks and wealth management companies was 28.4 trillion yuan.
Among them, the balance of wealth management company products was 17.3 trillion yuan.
At present, wealth management companies, as asset management institutions with independent legal personality, occupy an important position in the wealth management market, and it is necessary to build a comprehensive and effective internal control management system as soon as possible.
"Generally speaking, the governance system of wealth management companies still needs to be deepened and improved. The formulation of the "Measures" puts forward comprehensive requirements for the construction of internal control systems, covering internal control organizational structure, internal control activities, and internal control supervision. It is of great significance for wealth management companies to establish a scientific and stable investment concept." Zeng Gang, director of Shanghai Finance and Development Laboratory, said that the internal control system of wealth management companies is different from that of banks. The management industry, especially the investment attributes such as public funds, realize effective supervision around asset management transactions, internal control and other aspects.
Dong Ximiao, chief researcher of China Merchants Union Finance, said that in my country, the personnel information registration and publicity system has been widely implemented in securities companies and fund companies.
As a new type of asset management institution, wealth management companies, the "Measures" mentioned the establishment of personnel information registration and publicity systems in wealth management companies, which is a concrete manifestation of promoting the consistency of regulatory rules for similar businesses, and helps to promote the standardized practice of wealth management company employees and avoid inconvenience. Personnel who meet the occupational requirements are "exhausted".
At present, the new regulations on asset management and other regulations all put forward the principle requirements of internal control.
The person in charge of the relevant department of the China Banking and Insurance Regulatory Commission stated that the "Measures" are a refinement and supplement to the principled requirements of the new asset management regulations and the wealth management company measures, which are conducive to promoting wealth management companies to establish and improve unified and standardized internal control standards.
Wealth management companies should develop a "clean start" from the early stage of establishment, and build an internal control compliance management system suitable for their own business scale and characteristics, so as to provide a solid guarantee for stable operation and risk prevention in the future.
Build a risk wall
The "Measures" pointed out that wealth management companies should formulate special internal control points and management procedures for departments and business links with higher internal control risks.
The internal control system is the core system of an asset management institution. It not only involves important links such as its internal organization management and transaction operation, but also the basis for the entire risk prevention. Major risks often originate from the failure of internal control.
Zeng Gang said that from a deeper level, good internal control is conducive to improving the governance system of wealth management companies. From this perspective, it also lays a solid foundation for the improvement of the regulatory system and the orderly development of wealth management companies.
With the successive landing of bank wealth management subsidiaries, the timely establishment of an internal control management system is the premise for preventing and resolving various hidden risks.
However, we cannot ignore the fact that the internal control management of some wealth management companies in the asset management industry is still facing challenges.
"For wealth management companies, investment and research capabilities are the core competitiveness of the asset management industry. On the whole, there is still a certain gap between the existing investment research level of wealth management companies and mature funds, trusts and other industries." Everbright Bank Financial Market Zhou Maohua, a macro researcher of the Ministry of Finance, said that wealth management products have broken the transition from just exchange to net worth, and the fluctuation of net worth has increased. It is a big test for wealth management companies to achieve a balance between income and volatility and prevent and control risks.
Under such circumstances, the wealth management industry needs to accelerate the improvement of the regulatory system and promote the supply-side structural reform of wealth management institutions, so as to promote the sustainable and high-quality development of asset management institutions.
"The "Measures" formulate a comprehensive, systematic and standardized internal control system for various business activities and management activities, and conduct a comprehensive evaluation at least once a year. The person in charge of the relevant department of the China Banking and Insurance Regulatory Commission said that it is necessary to improve the investment and transaction system and process, and clarify the different Type asset investment review standards, decision-making process, risk control measures and post-investment management requirements, and improve the entire transaction process management system, so as to effectively identify and control the risks of relevant asset management institutions.
Dong Ximiao believes that establishing an effective risk isolation system and building a solid financial "firewall" is an important guarantee for reducing the spread of systemic risks in the financial industry among different institutions.
It is a more realistic and effective way to isolate risk contagion by setting up different legal entities within a group.
The "Measures" strengthen the fiduciary management responsibilities of wealth management companies, and emphasize the regulation of related transactions with controlling shareholders and risk isolation, which is of great significance.
In the next step, wealth management companies should clarify and refine relevant regulations to achieve management isolation, business isolation, reputation isolation, personnel isolation, and information isolation from their parent banks. This will not only help wealth management companies operate stably, but also promote wealth management companies. Orderly innovation.
In general, the "Measures" together with the new regulations on asset management, the wealth management company measures and other institutional rules constitute the basic compliance of the internal control management of wealth management companies, and play a crucial role in preventing and defusing the risks of wealth management companies.
Protect the legitimate rights and interests of investors
As residents accumulate wealth and increase their awareness of investment and wealth management, the demand for high-quality and diversified wealth management products is growing.
The "Annual Report on China's Banking Wealth Management Market (2021)" shows that the number of investors holding wealth management products in the bank's wealth management market has reached a new high. Occupy the absolute main force in the wealth management market, and the overall investment style has become more stable.
In the face of such a huge number of investors, when wealth management companies are about to usher in a "new blue ocean", while protecting the legitimate rights and interests of investors, effective and complete institutional guarantees are indispensable.
At present, the regulatory policies of the wealth management industry are improving day by day, and the wealth management market is showing a steady and positive development trend, which is mainly due to the continuous efforts of the regulatory authorities.
Zhou Maohua said that on the one hand, we will continue to promote wealth management companies to establish and improve systems and rules for product issuance, investment operations, etc., on the basis of establishing and optimizing the investment research system, strengthen talent training and technological empowerment, and improve investment research capabilities in multiple dimensions; on the other hand In terms of regulatory measures, it is necessary to refine regulatory measures and carry out precise policies around the legitimate rights and interests of investors.
It is worth noting that the Measures emphasize from different aspects that wealth management companies should establish and improve the protection of investors' rights and interests, and establish an effective mechanism for handling investor complaints, which is conducive to improving the internal control system and other aspects of safeguarding work.
For example, the "Measures" emphasize that wealth management companies should establish a conflict of interest prevention and control system, not to transfer benefits to any institution or individual, and not to engage in activities that damage the interests of investors.
"As the asset manager of investors, wealth management companies shoulder the responsibility of custodianship to achieve the goal of wealth preservation and appreciation for investors." Xue Hongyan, vice president of Xingtu Financial Research Institute, said that the interests of investors, shareholders and management must be balanced between the interests of investors, shareholders and management. Balance between the two, and focus on the interests of investors.
To achieve this, it needs to be guaranteed in terms of governance mechanisms, institutional processes, and cultural construction.
In addition, wealth management companies need to improve their professional capabilities, further achieve professional due diligence, and strive to achieve a balance between liquidity and profitability of wealth management products, so as to create benefits for investors.
"Next step, wealth management companies should strengthen investor education. The important thing is to guide investors to make reasonable investments within the range of income fluctuations, change the previous concept of rigid payment and capital preservation, and gradually cultivate investors' correct wealth management concepts." Huo Yijing, a researcher at Puyi Standards, said.
The principle of giving priority to the interests of investors mentioned in the Measures is also a principle requirement that all types of asset managers must follow.
Xue Hongyan believes that when there is a conflict between the interests of shareholders and investors, the interests of investors must come first.
For example, in the conflict between scale and income, the revenue of wealth management companies is usually positively related to the management scale, but sometimes blindly expanding the scale will reduce the profitability of products and cause damage to the interests of investors. At this time, wealth management companies should take the interests of investors as the priority First, moderately reduce the pursuit of scale.
However, considering that reducing the pursuit of scale at this time is contrary to the interests of wealth management companies, it is difficult to achieve it consciously and requires the intervention of mandatory forces such as supervision.
Zeng Gang suggested that in terms of the regulatory system, we should also focus on key areas and weak links, in accordance with higher standards and stricter requirements, and continuously improve the professionalism and effectiveness of supervision in terms of investor rights protection and transparency construction.
For example, focus on refining investor suitability management, improving information disclosure systems, and introducing strategic investors. In the long run, the improvement of these systems will help improve the corporate governance system and ensure the stability and sustainability of asset management institutions. develop.
Wang Baohui