On 25 August 2017, the China Banking Regulatory Commission (“CBRC”) issued the Guidelines for Information Disclosure on the Business Activities of Network Loan Information Agencies.
The guidelines were issued to partially implement the Interim Measures on the Administration of the Business Activities of Network Loan Information Agencies 2016, which together with the Guidelines for Network Loan Information Agencies record-filing management 2016 and the Guidelines on the Depository Business for Funds of Online Peer-to-Peer Lending 2017 form the regulatory framework governing peer-to-peer (“P2P”) lending.
According to the guidelines, a network loan information agency and its branches must disclose the following information through its official website and other internet channels (such as Apps, Wechat and Weibo):
- Information disclosed to the public. This includes an agency's basic information, operating information, contact information (for public enquiry or complaint), and the cause, status, possible impact and measures to be taken regarding any material incident.
- Information disclosed to lenders. This includes basic information on the borrower and project, project risk assessment and possible risk outcomes.
The content of any disclosure must be kept in writing for at least five years from the date of disclosure.
The guidance took effect immediately upon issuance, but it gives network loan information agencies up to six months to rectify any areas of non-compliance.
Harvey Lau, Partner, Baker & McKenzie, Shanghai
"With the issuance of these guidelines, the "1+3" regulatory framework for P2P lending, that is, the interim measures, plus guidelines on record-filing, depository businesses and information disclosure, has been established at last. Specifically, the disclosure guidelines prescribe uniform and detailed requirements for the information that each lending agency and its branches must disclose. These new requirements should help to improve transparency in relation to agencies, borrowers and projects, lessen the risks to lenders, and foster the healthy development of the P2P lending market."
General Counsel for companies operating as a network loan information agency will want to carefully study the disclosure requirements and put in place mechanisms to ensure compliance. Counsel for any individual or entity operating in this space, including lenders, borrowers and custodial banks, will want to ensure compliance with the entire regulatory framework as the grace period under the interim measures has expired.