Improve the regulatory system for financial management companies

On March 16, according to the website of the China Banking and Insurance Regulatory Commission, in order to thoroughly implement the decisions of the Central Financial Work Conference on accelerating the transformation and development of bank wealth management subsidiaries, improve the regulatory system for wealth management companies, and promote the development and regulatory models that match their capabilities, the Financial Regulatory Bureau recently issued the “Interim Measures for the Supervision and Rating of Wealth Management Companies,” which took effect upon issuance.

The Measures include general provisions, regulatory rating elements and methods, organizational implementation, use of rating results, and supplementary provisions. They specify the overall requirements for the supervision and rating of wealth management companies, rating elements, basic procedures, and classified regulation. The results of the supervision and rating are divided into levels 1 to 6 and S level; higher numbers indicate greater institutional risk and a need for increased regulatory attention.

Clear Principles for Classified Regulation

The Measures clarify the rating elements and methods. They establish six rating modules: corporate governance, asset management capability, risk management, information disclosure, investor protection, and information technology, with respective weightings of 10%, 25%, 25%, 15%, 15%, and 10%. They also set targeted scoring items, deduction items, and level adjustment factors to comprehensively evaluate the operation, management, and risk status of wealth management companies.

Additionally, the Measures specify the basic procedures for supervision and rating. The process includes self-assessment, initial evaluation, review, and feedback. After the rating, if the regulatory authorities discover significant issues during the rating period or if there are major changes in the risk or management status of the wealth management company, they may adjust the rating results dynamically.

It is noteworthy that the Measures explicitly establish principles for classified regulation. The rating results are an important basis for regulatory resource allocation, market access decisions, and differentiated regulatory measures. A relevant official from the Financial Regulatory Bureau stated in response to questions that the Measures specify ratings from 1 to 6 and S level, with each level corresponding to different risk characteristics and regulatory measures for wealth management companies.

Specifically, Level 1 and 2 companies operate steadily with relatively low risk, primarily subject to non-site and routine supervision, with priority support for innovative pilot businesses such as pension wealth management; Level 3 and 4 companies have certain or more significant risk issues, requiring strengthened supervision in key areas, necessary corrective measures, risk control of incremental risks, reduction of existing risks, and prevention of risk spread; Level 5 and 6 companies face serious risk problems, requiring real-time risk monitoring, strict restrictions, and resolution of high-risk activities, with orderly risk disposal or market exit; S-level companies are those undergoing restructuring, takeover, or market exit, and do not participate in the current year’s supervision rating.

Establish a Prudential and Steady Business Philosophy

A relevant official from the Financial Regulatory Bureau stated that by the end of December 2025, there will be 32 existing wealth management companies with a total wealth management product scale of 30.7 trillion yuan, accounting for 92% of the total market of 33.3 trillion yuan. After more than six years of development, the industry has achieved positive results in standardized transformation and has become an important part of China’s asset management industry. However, some institutions still face issues such as unclear development positioning, the need to improve professional investment capabilities, the ongoing deepening of net value transformation, and imperfect risk management.

“To further clarify the development direction of the wealth management industry, improve the regulatory system for wealth management companies, and promote their continuous capability enhancement, it is very necessary to formulate and implement the Measures,” the official said. First, it helps strengthen regulatory guidance. The rating acts as a “directive,” urging wealth management companies to establish a prudent and steady business philosophy and fulfill their fiduciary responsibilities. Second, it accelerates transformation and development. By benchmarking industry leaders, identifying gaps, and continuously strengthening capabilities, companies can enhance endogenous growth momentum. Third, it facilitates rational allocation of regulatory resources. Through ratings, the risk and operational characteristics of wealth management companies are better reflected, enabling targeted regulation of key institutions and areas, and improving regulatory precision and scientificity.

The Financial Regulatory Bureau stated that the issuance and implementation of the Measures will help accelerate industry transformation, guide wealth management companies to improve their investment research and risk control capabilities, and will focus on strengthening supervision and guidance, ensuring the effective implementation of the Measures, continuously improving regulatory quality, and promoting steady and compliant development of wealth management companies to better serve residents’ wealth management needs and the high-quality development of the real economy.