Bank Financial Products Consumers Protection and Legal Suggestions
Bo, Feng, Canadian Social Science
Along with the rapid development of bank financial products in our country, the situation where financial consumers' interests are encroached on is never new in the market. The major manifestation is that banks infringe upon consumers' property right, information right, privacy right and the right of fair trade when selling financial products. As to the defects in the protection for consumers of financial products provided by the existing laws and regulations in our country, the author suggests segmenting the information disclosure and implementing the suitability principle in sales to safeguard the legitimate interests of consumers of bank financial products.
Key words: Bank financial products; Financial consumers; Information disclosure; Suitability of investors
1. REVIEW OF CONSUMER INTERESTS TORT EVENTS IN SELLING BANK FINANCIAL PRODUCTS
The amount of distribution of bank financial products in 2011 reached a historical high, which figure exceeded 17,000 till December 20, 2011, with an increase of 102% on year-to-year basis. As financial products develop continuously, the infringement upon consumers' interests emerge endlessly, which interests mainly include property right, information right, privacy right and the right of fair trade. Firstly, infringement upon consumers' property right is manifested as: The bank transaction system automatically closes out positions for clients with insufficient margin deposits, no risk management measures are taken to control clients' transaction risk, or special restrictions on bank financial management deprive consumers of their opportunity for obtaining proceeds or cutting their loss. Secondly, infringement upon consumers' information right is manifested as follows: Banks choose to selectively disclose product information rather than fully disclose information of products, and insufficient information is disclosed in terms of the design structure, investment orientation, investment ratio, period, investment risk and proceeds of financial products. Thirdly, infringement upon consumers' privacy right is manifested as follows: Banks "transfer" or provide clients' identity information and account information to other bank departments without authorization for the purpose of recommending business to other potential clients. Fourthly, infringement upon consumers' right of fair trade is manifested as follows: When clients purchase financial products, banks often unreasonably sell insurance, force clients to open credit cards or ask clients to solicit potential clients for them.
2. DEFECTS OF OUR EXISTING LEGAL SYSTEM IN THE PROTECTION FOR CONSUMERS OF BANK FINANCIAL PRODUCTS
2.1 Defects of Civil Law in the Protection for Consumers of Bank Financial Products
2.1.1 Provisions of Standard Form Contracts Fail to Protect Consumers of Financial Products Effectively
In the financial management market for commercial banks, financial management contract adopts the standard form contract that is formulated by commercial banks which have the information superiority. Although the transactional efficiency is increased by using standard form contracts, some problems arise. Firstly, during the financial transaction in which information is severely asymmetrical, banks do not explain the content of standard form contracts to clients in the right way, especially the content of exemption clauses and benefit distribution, failing to perform the obligation to explain as specified by law. Besides, the professional quality of financial sales staff of commercial banks is at different levels and most of sales staff sells financial products by inducing clients to purchase and even by concealing certain items from clients or cheating clients publicly. Secondly, some clauses stipulated in standard form contracts are obviously unfair. Article 39 of the Contract Law stipulates that, "The Party that provides standard clauses shall define the rights and obligations of parties concerned in the principle of fairness, remind the other Party to pay attention to liability exemption or restriction clauses in a reasonable manner and give explanation on those clauses as required by such other Party. …