China tightens P2P rules in anti-fraud crackdown
CHINA’S banking regulators have tightened rules to combat fraud in the country’s scandal-hit peer-to-peer lending sector.
The China Banking Regulatory Commission announced on Thursday it may force platforms to use commercial banks as third-party fund custodians.
Read more: China’s P2P fraud trial is underway
And Shanghai’s financial authority is proposing new rules that will require P2P lenders to disclose more financial data before July in order to obtain a licence, the Shanghai Daily reported.
The move follows a national campaign to clamp down on the booming sector, where a lack of safety standards is said to have caused multi-billion pound losses to investors since the end of 2015.
Wrongdoings led to the loss of at least $24bn (£19.2bn) of investors’ savings in 2015, the newspaper said.
The highest-profile case saw P2P platform Ezubao operate a Ponzi scheme to raise over 58bn yuan (£6.7bn) from 901,294 investors.
Despite the scandal, the P2P sector was lending $118bn by the end of 2016 – double the amount of the previous year.
Last week, a report by the Beijing Bureau of Financial Work warned that up to 90 per cent of the country’s P2P lenders could fail in 2017, due to “a multitude of problems exposed.”