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

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The headquarters of the China Banking and Insurance Regulatory Commission in Beijing. Photo: dfic

Published: 7:30am, 17 Mar 2022

China’s banking watchdog will strengthen rules governing the marketing of financial products, particularly the use of celebrities to promote loans or investment products.

The regulator will also tighten curbs on illegal charges levied by commercial banks on firms, especially small and medium-sized enterprises, micro enterprises and sole proprietors, Guo Wuping, director of the Consumer Protection Bureau of the China Banking and Insurance Regulatory Commission (CBIRC), said during a press conference late on Tuesday.

“We will add in regulation over the marketing of financial products, including the hiring of stars to do promotions. This will focus on how they target young customers. There will also be tougher penalties for misconduct in the marketing of financial products,” he said. “This will strengthen investors’ confidence, and will allow the consumer financing industry to develop in a healthy manner.”

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.

“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.