Part 5
Current status of consumer finance ABS regulation
(1) Regulatory policies have emerged frequently, and the regulation of consumer finance ABS has become increasingly stringent
With consumer finance coming into everyday life, China's Internet finance consumption had once shown explosive growth. However, as problems with internet finance such as credit cards, installment loans and small loans continue, national regulators have been formulating more and more regulatory policies for internet consumer finance ABS to promote their rational development.
(2) Categorization and rating enables more detailed regulation
In 2021, the CBRC issued the "Measures for the Supervision and Rating of Consumer Finance Companies (for Trial Implementation)", which scored and rated companies in five major dimensions: corporate governance and internal control, capital management, risk management, professional service quality, and information technology management, with companies of different grades facing different regulatory measures. The introduction of the Measures has provided certain guidance and control ideas for major banks that use credit cards as the main source of credit consumption, to control and prevent various problems in consumer finance from the source of credit card consumption. There are also different regulatory measures for different types of credit cards of different types of banks, making it possible to regulate credit card spending risks in a more appropriate way.
(3) Although the regulatory authorities have been strengthening regulation, a sound market regulatory system has not yet been developed for the current stage of development
We know that a healthy and effective regulatory system is a favorable guarantee for the issuance and development of consumer finance ABS. Although regulation is becoming stricter, it has not risen to a complete institutional system. For example, there is no system in place to effectively monitor the credit system, and risks such as credit card expectations, credit card fund flows and credit card cash out still exist.
(4) The combination of institutional regulation and big data platform supervision will become the future trend of regulatory development
For the future of consumer finance, the regulatory authorities will focus more on the review and approval of "compliance" for credit card and other financial institutions, and the increasingly detailed regulatory system will become the basis for "compliance" for consumer finance ABS. At the same time, the construction of a big data platform will provide the regulator with more risk monitoring data using the internet + visualisation data platform, and access to the system platforms of internet consumer financial institutions for supervision and management, allowing for data sharing and timely supervision.
Reference list:
Liu, K., 2020. Chinese consumer finance: a primer. Frontiers of Business Research in China, 14(1), pp.1-22.
Liu, J., 2018, September. Research on internet finance: Its business models and development trend. In Proceedings of the 2nd International Conference on Business and Information Management (pp. 169-172).
Xie, P., Zou, C. and Liu, H., 2016. The fundamentals of internet finance and its policy implications in China. China Economic Journal, 9(3), pp.240-252.
Ya-jun, W.A.N.G., 2017. Research on the development model of consumer finance under the background of internet. Technoeconomics & Management Research, p.11.
Adams, T., Rutledge, A. and Raynes, S., 2011. Joint obligation ratings in consumer ABS. The Journal of Structured Finance, 17(1), pp.50-54.
Furletti, M.J., 2002. An overview of credit card asset-backed securities. FRB of Philadelphia Payment Cards Center Discussion Paper, (02-14).
Commentaires