China’s top consumer credit firm fined US$1.37 million for malpractice, executives fined, blacklisted

China’s first consumer credit company has become the latest financial firm to be hit by scandal after the banking regulator fined it for malpractice, and handed out individual punishments to its four executives.

Bank of Beijing Consumer Finance Company, which was established in 2010 with the hope of finding a business model for consumer credit in China, was fined nine million yuan (US$1.37 million) for “seriously violating prudent operating principles”, including running unauthorised businesses, filing false documents and hiding important facts from the regulator, the Beijing branch of the China Banking Regulatory Commission said in a statement over the weekend.

The executives punished were Song Wenchang and Gu Tao, who were fined 500,000 yuan and 200,000 yuan, respectively; and Yin Zheng and Yuan Yaochang who were barred from working in China’s banking industry for 12 years and two years, respectively.

The regulator did not provide details of their specific wrongdoings or give their job titles. When the Post called Yuan on his mobile phone, he denied any knowledge of the punishment and turned off his handset. All other calls to the Beijing-based firm went unanswered.

“The biggest difficulty for consumer finance in China is the lack of credit records,” Felix Yang, an analyst from consultancy Kapronasia, wrote in a report.

More than 900 million Chinese, or 65 per cent of the population, have no credit records, compared to just 11 per cent in the US, he said.