Financial Companies Face Classified Supervision; Low-Rated Institutions Severely Restricted in High-Risk Business

Why has the weight of investor protection in the rating system increased?

Blue Whale News, March 16th (Reporter Yan Qinwen) The long-discussed “Interim Measures for the Supervision and Rating of Wealth Management Companies” (hereinafter referred to as the “Measures”) has been officially issued.

On March 16th, the official website of the China Banking and Insurance Regulatory Commission disclosed the main content of the “Measures.” The document consists of five chapters and 26 articles, including general provisions, regulatory rating factors and methods, organizational implementation, application of rating results, and supplementary provisions. It sets out the overall requirements for the supervision and rating of wealth management companies, rating factors, basic procedures, and classification supervision.

First, it clarifies the rating factors and methods. The “Measures” establish six rating modules: corporate governance, asset management capability, risk management, information disclosure, investor rights protection, and information technology. These modules are assigned weights of 10%, 25%, 25%, 15%, 15%, and 10%, respectively. The system also includes specific scoring items, deduction items, and level adjustment factors to comprehensively evaluate the management and risk status of wealth management companies.

Second, it clarifies the basic procedures for regulatory ratings. The process includes self-assessment by the institution, initial review, verification, and feedback of results. After the rating, if the regulatory authorities discover significant issues during the rating period or if there are major changes in the company’s risk or management status, they can make dynamic adjustments to the rating results.

Third, it clarifies the principles of classified supervision. The rating results serve as an important basis for regulatory resource allocation, market access, and differentiated regulatory measures.

“With the issuance of the ‘Measures,’ it aligns with the industry’s previous expectation of ‘focusing on quality rather than scale,’” said Zhou Yiqin, a senior financial regulatory policy expert, in an interview with Blue Whale News. “This establishes a quality-centered rating system from a systemic design perspective.”

According to the “Measures,” rating results are divided into levels 1–6 and S level, each with specified risk characteristics and classification supervision measures. High-rated institutions may enjoy benefits such as pilot programs for innovative businesses like pension wealth management, while low-rated institutions will face restrictions on business growth and gradual reduction of existing business.

Specifically, wealth management companies rated 1 or 2 are considered stable with relatively low risk. Supervision mainly involves off-site and routine oversight, with priority support for innovative pilot projects like pension wealth management.

Companies rated 3 or 4 have certain or multiple risk issues, requiring strengthened supervision in key areas, necessary corrective measures, risk control of new business, reduction of existing risk, and prevention of risk spread.

Those rated 5 or 6 face serious risk problems, requiring real-time risk monitoring, strict restrictions, and resolution of high-risk activities, with orderly risk disposal or market exit.

S-level wealth management companies are those undergoing restructuring, takeover, or market exit, and do not participate in the current year’s rating.

The “Measures” also state that if a company’s rating declines and no longer meets the conditions for certain business activities, it cannot initiate new such activities. If the next year’s rating remains low, the company must orderly reduce its existing related business.

Notably, Zhou Yiqin believes that in the rating factor weights, besides focusing on quality indicators such as research and development capability, product performance, and risk control (asset management ability and risk management each accounting for 25%, totaling 50%), information disclosure and investor protection have become areas that wealth management companies must prioritize and improve. “Information disclosure and investor rights protection together account for 30%, both related to investor protection, highlighting the long-term emphasis of financial regulators on safeguarding investors’ rights.”

Zhou further pointed out that compared to trust supervision ratings, which focus on risk resolution and business transformation, and insurance asset management ratings, which emphasize traditional indicators like corporate governance, investment, and risk control, China’s top-level design for investor protection has already undergone new institutional and systemic reforms before the release of the wealth management company rating system.

“It is clear that the proportion of scores related to investor rights protection has reached an unprecedented high. Coupled with the upcoming implementation of the Information Disclosure Management Measures in September, and as some wealth management products are gradually shifting from numerical benchmarks to index-linked performance, the standardization of information disclosure becomes increasingly critical,” Zhou said.

The “Measures” will take effect from the date of issuance. By the end of December 2025, 32 wealth management companies in China will have a total of 30.7 trillion yuan in existing wealth management products, accounting for 92% of the total market of 33.3 trillion yuan.