China moves to curb use of celebrities for promotion of financial products
- Celebrities may not fully understand the risks and details of the investment products they help to promote, CBIRC executive says
- Regulator will also tighten curbs on illegal charges levied on small firms and sole proprietors
Tighter regulation by the CBIRC is expected to enhance protection for investors and customers of financial firms. It is common practice for these companies to find a celebrity to promote their problematic loans or investment products. For instance, actors Du Haitao and Wang Han were among stars recently advertising peer-to-peer financial services, which later collapsed, leaving their customers with huge losses.
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“Since many financial products are sophisticated and complicated, endorsers – particularly stars – may not fully understand the risks and details of the investment products they help to promote to customers,” Guo said.
Celebrities may end up promoting illegal lending platforms, or products that promise returns of up to 10 per cent a year but do not deliver such returns, he added. Promotions by well-loved celebrities may result in customers getting misleading information, encouraging them to invest risky products or to borrow beyond their ability to repay, Guo said.
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The new measures will ban companies that are not qualified to sell financial products from promoting any such products, and from hiring celebrities to do any endorsements. Even firms that have approval to sell financial products will be banned from making claims that promise unrealistic returns, or from saying their investments were risk-free, Guo said.
He added that the CBIRC received 2.5 million enquiries from financial customers last year. The regulator handled 510,000 complaints in 2021, 50 per cent higher than a year earlier. It also successfully resolved 114,000 disputes between customers and financial firms, and helped customers reclaim 24.5 billion yuan (US$3.9 billion).