CBIRC: Bancassurance institutions should control the number and scale of related transactions to avoid complicated and multiple level investment relations
On June 21, China Banking and Insurance Regulatory Commission(CBIRC) issued the "Administrative Measures for Related Party Transactions of Banking and Insurance Institutions" (Draft for Solicitation of Comments) (hereinafter referred to as the "Measures"), and publicly solicited opinions to further strengthen supervision of related party transactions, regulate associated transactions of bancassurance institutions, and prevent risks of illegal profits transfer.
On the whole, the "Measures" has seven chapters and 68 articles, including general rules, related parties, related transactions, internal management of related transactions, reporting and disclosure, supervision and management, and supplementary provisions.
CBIRC emphasized that bancassurance institutions must not conduct improper profit exchange or regulatory arbitrage through related transactions. Effective measures should be taken to prevent related parties from using their special status to infringe on the interests of bancassurance institutions through related transactions.
The "Measures" focuses on coordinating and regulating the supervision of related-party transactions in the banking and insurance industry. To combine the system advantages of banking and insurance industry, the "Measures" unifies management rules of related transactions and meanwhile strive to implement differentiated supervision based on different institutions’ characteristics.
Secondly, the general principles of supervision are clarified. CBIRC emphasized that bancassurance institutions should maintain independence of company's operations, enhance market competitiveness, control the number and scale of related transactions, focus on preventing the risk of transferring benefits to shareholders and their related parties, and avoid forming multiple level investment relations.
In the next step, CBIRC will extensively listen to opinions and suggestions from all parties, further revise and improve the "Measures", and publish and implement it in due course.
source: BlueWhale Insurance