Chongqing - The first Consumer Finance Summit recently held in Chongqing attracted nearly 200 experts and financial leaders in the consumer finance field.

Prioritizing the financial health of institutions and consumers

The summit unveiled the Responsible Consumer Finance Standards, a first for the industry, co-authored by teams from the Shanghai Institution for Finance & Development Laboratory and the Chongqing Supervisory Bureau of the National Administration of Financial Regulation.

The research team divided the standards into five themes and various indicators. The five themes are society and environment, consumer protection, consumer promotion and enhancement, digital finance business risk management, and partner management.

"In today's context of stimulating consumption, the financial health of institutions and consumers deserves particular attention," said Zeng Gang, Director of the Shanghai Finance and Development Laboratory. He highlighted that the standards offer guidance on appropriate management and responsible marketing, among other aspects.

Zeng noted that the digital complexity of China's consumer finance ecosystem raises complex consumer protection challenges, extending beyond traditional institutional conduct and pricing to include guidance on sensible borrowing, managing partners, and securing data.

He argued that while a narrow view of Responsible Consumer Finance centers on consumer rights protection, a broader perspective should highlight financial institutions' ESG responsibilities to the environment, society, and customers alongside commercial pursuits.

The standards focus on the conduct of consumer finance service providers, underscoring the necessity of continuous enhancement of the market environment for consumer protection, widening its scope, and improving protection quality to realize Responsible Consumer Finance.

Responsible Consumer Finance practices to prevent overconsumption 

The inaugural inclusion of "social and environmental" aspects in the Responsible Consumer Finance Standards highlights their alignment with the evolution of consumer finance business and macroeconomic policies to support consumption recovery and stimulate potential demand.

Zeng said that within the research framework, Responsible Consumer Finance should tackle issues such as excessive debt, misuse of funds, and structural imbalances, offering guidance on proper management, responsible marketing, and partner management.

Consumer finance institutions have indeed started to venture into this exploration. For example, Chongqing Ant Consumer Finance Co., Ltd. employs a strategy combining accurate credit distribution, scenario-based restrictions, and management tools to direct funds towards legitimate consumption needs, thereby aiding in preventing overconsumption among consumers.

"The release of the standards is just the starting point. We hope consumer finance institutions will increase their practices in these responsible areas, improve disclosure frequency, and gradually perfect their processes in the future," Zeng emphasized.

By the end of 2023, Chongqing was home to over 80 consumer finance institutions, witnessing a 30% annual increase in consumer loan volume, signaling robust growth. The city's three consumer finance companies represented 26.67% of the national industry's loan balance, leading the country, and its personal consumer loan balances from online micro-loans topped the national charts for eight straight years.