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engaging in fund sales management without obtaining the fund practitioner qualifications, failing to warn investors of possible investment risks, exaggerating the fund manager's past performance... recently, the chongqing branch of the industrial and commercial bank of china, the chongqing branch of china merchants bank, and the chongqing branch of china guangfa bank were issued warning letters and ordered to correct their mistakes by the chongqing securities regulatory bureau.

since the beginning of this year, many banks have been ordered by the securities regulatory bureau to correct violations in fund agency sales, among which unlicensed sales have become the "hardest hit area" for banks. industry insiders said that as an important channel for fund agency sales, banks must conduct product review and access before sales, pay attention to investor suitability management during sales, and conduct retrospective tracking of the agency sales process after sales.

several banks were fined

due to non-compliance in the agency sales of public funds, the chongqing securities regulatory bureau recently issued warning letters to the chongqing branch of the industrial and commercial bank of china and the chongqing branch of china merchants bank, and ordered the chongqing branch of china guangfa bank to correct its mistakes.

after investigation, it was found that some employees of icbc chongqing branch who did not obtain fund practitioner qualifications were engaged in fund sales management. the chongqing securities regulatory bureau stated that icbc chongqing branch should effectively strengthen compliance management, strengthen the supervision of employees' professional behavior, and prevent such problems from happening again.

source: chongqing regulatory bureau official website

upon investigation, it was found that during the process of ordinary investors of fund products applying to become professional investors, the chongqing branch of china merchants bank did not explain to investors the differences in fulfilling suitability obligations for different categories of investors, nor did it warn them of possible investment risks.

source: chongqing regulatory bureau official website

in addition, some of the promotional materials used by china merchants bank chongqing branch in the fund sales process published the past performance of specific products of fund managers, but did not cover the past performance of all similar products managed by the fund manager; some of the promotional materials were one-sided and exaggerated in promoting the past performance of fund managers. the chongqing securities regulatory bureau stated that china merchants bank chongqing branch should effectively strengthen investor suitability management, further standardize fund promotion and publicity, and prevent such problems from happening again.

after investigation, the chongqing branch of china guangfa bank had the following problems: first, the person in charge of fund sales business, some compliance personnel and the persons in charge of fund sales business of individual branches did not obtain the fund practitioner qualification; second, the bank adjusted the person in charge of fund sales business and did not submit the filing materials for the dismissal and appointment of relevant personnel; third, no self-examination of the suitability of fund sales business was conducted in the first half of 2023.

source: chongqing regulatory bureau official website

the chongqing securities regulatory bureau stated that the chongqing branch of china guangfa bank should immediately take effective measures to rectify the above problems, establish and improve relevant internal control systems, standardize employee professional behavior, strictly implement filing and reporting requirements, and improve the compliance management level of fund sales. the bank should submit a written rectification report to the chongqing securities regulatory bureau within 30 days from the date of receipt of the decision letter.

standardize sales operations throughout the entire process

this year, many banks have been ordered by the securities regulatory commission to make corrections due to violations in fund agency sales. problems such as working without a license and illegal assessments have become the "hardest hit areas" for banks, affecting all large, medium and small banks.

as an important channel for the distribution of public funds, it is particularly important for banks to implement detailed regulatory requirements for fund distribution business amidst the volatility of the equity market.

zhou maohua, a macro researcher at the financial markets department of china everbright bank, said that banks must speed up the process of filling in the gaps in internal control systems, equip themselves with professional sales personnel with high comprehensive qualities, improve the risk control system, and implement investor suitability management requirements.

fund industry insiders said that it is recommended that banks standardize their sales operations throughout the entire process.

specifically, in the product access link, the agency products should be fully investigated and reviewed, carefully selected, and the agency product access link should be strictly controlled; in the product sales link, the agency business sales regulations should be strictly observed, investor suitability management should be strengthened, information disclosure and risk disclosure should be strengthened, and exaggeration, false propaganda and other means should not be used to mislead customers into purchasing products; in the after-sales link, the agency process should be traced back, the professional quality of the sales team should be improved, professional learning should be strengthened, and compliance awareness should be enhanced.