China cracks down on regulators jumping ship to banking jobs

China is attempting to shut a revolving door that allows financial regulators to jump ship to private companies by restricting the movements of officials after they leave their posts.

The China Banking Regulatory Commission (CBRC), the country’s top industry watchdog, is to ban officials working in regulatory positions from taking jobs at financial firms within three years of their resignation, Bloomberg reported on Monday afternoon.

It is the latest in a series of moves by regulators aimed at tightening the rules in the wake of several scandals that have threatened to destabilise financial markets.

Two sources close to the CBRC told the South China Morning Post the rule is not in fact new, but the regulator is attempting to “stress and specify” existing restrictions designed to stop officials taking advantage of their positions.

The commission is considering whether or not to announce the regulations to the public or just make them internal codes of practice as before, one source said.

While rules are already in place to restrict senior officials above a certain level from jumping ship to financial companies, loopholes exist which have made enforcement difficult, the other source said.

“For example, a senior CSRC official could find a job in a state-owned fund house because that can be considered as an ‘internal job transfer’ rather than job hopping, and is thus exempt from the restriction,” he said.