In China, chaos in the opening of individual pension accounts has been occurring frequently. Recently, Industrial Bank was exposed for opening individual pension accounts without permission, causing losses to many users. This misconduct has once again sparked public concern.
Starting from December 15, the implementation scope of the individual pension system in China has expanded nationwide from the original pilot cities. During the pilot period of more than two years for the individual pension system, non-pilot areas could only make reservations for account opening. If the reservation was successful, the accounts would be officially opened on December 15, 2024.
On December 15, many users took to social media platforms in China to reveal that several commercial banks had secretly opened individual pension fund accounts for customers without their knowledge. One of the banks involved was Industrial Bank, and their operation process was described as bizarre.
One user reported receiving a text message from Industrial Bank on the morning of December 15, stating that an individual pension account had been opened for them. Upon checking, they discovered that a pension bank card had been opened with all their personal information, which was unsettling.
Unable to find a way to cancel or deactivate the account through the bank’s app, contacting customer service only led to a runaround. Eventually, they had to go to a physical branch to cancel the account. Surprisingly, the account’s opening branch was located in Fujian, a significant distance away.
Another user mentioned that Industrial Bank employed phishing tactics to promote the individual pension business, with Alipay inducing clicks to open individual pension accounts without consent. The current demand is for account closures.
As a mortgage customer of Industrial Bank, one user also suffered. On November 27, a customer mistakenly deposited their mortgage payment into an individual pension account due to it being set as the default account on the Industrial Bank app. Although the bank promised a refund within five working days, when the user went to process the refund, they were informed it would take five calendar days, causing further losses.
The numerous and complicated complaints point to the same behavior – Industrial Bank likely allowed users to open individual pension accounts without adequate information.
In an interview with Industrial Bank on December 17, following the national implementation of the individual pension system on December 15, the bank stated that they had opened accounts for customers based on previous reservations and notified by SMS. They mentioned assisting customers in canceling the individual pension accounts that were opened due to reservations. The bank assured of safeguarding customer’s right to information and personal information security.
Established in August 1988, Industrial Bank is headquartered in Fuzhou, Fujian Province. Listed on the Shanghai Stock Exchange in 2007, it was one of the first joint-stock commercial banks in China.
As one of the first commercial banks offering individual pension services, Industrial Bank provides customers with a comprehensive service ranging from account opening, fund deposits, product investment to withdrawals. By the end of 2023, the bank had introduced 140 fund products, 6 commercial pension insurance products, 3 pension wealth management products, and 6 savings products for individual pension clients.
However, the rapid growth trend in individual pension accounts at Industrial Bank has begun to slow down. Data shows that in the first half of 2024, the bank had opened 4.5013 million individual pension accounts, an increase of 5.94% from the previous year, indicating a significant slowdown. By the end of 2023, the bank had opened 4.2491 million individual pension accounts, an increase of 1.9575 million from the previous year, representing an 85.42% growth.
In terms of profit performance, the bank saw a significant 15.6% year-on-year drop in net profit to 77.12 billion in 2023. In the first three quarters of this year, its profitability continued to weaken, declining by 3.0% to 63.01 billion year-on-year.
Regarding asset quality, the non-performing loan ratio slightly rebounded this year, reaching 1.08% by the end of the third quarter, up 1 basis point from the beginning of the year. The watchlist loan ratio experienced a general increase, rising from 1.37% in 2020 to 1.77% by the end of the third quarter this year, showing a cumulative increase of 40 basis points.
A netizen commented on the situation, mentioning that Industrial Bank, along with other banks like China Construction Bank, had made account opening a tedious process, while surreptitiously opening individual pension accounts was more proactive.
In September 2023, the Economic Daily reported cases where individual pension accounts were mysteriously opened without the account holders’ knowledge.
According to the report, some bank staff members induced customers into opening individual pension accounts by concealing information, even going as far as using customers’ photocopies of ID cards left during transactions to open accounts without consent. Moreover, some banks collaborated with employers to mass-open individual pension accounts for their employees.
The reason for the fierce competition among commercial banks in offering individual pension services lies in the uniqueness of individual pension fund accounts. According to regulations, each participant can only select one eligible commercial bank to establish a fund account. To comply, many banks have assigned account opening tasks to staff at all levels. Some employees, driven by performance targets, either personally subsidized cashback to customers or sought external assistance on e-commerce platforms, and some even took risks without customer consent.
The chaotic account opening practices have led to an increase in complaints, decreased customer trust, adversely affecting business development, and long-term competitiveness.