The Mainland China Banking Regulatory Department recently issued a notice stating that there is no limit on the number of insurance companies that can collaborate with various branch offices and network points. Some commentators have warned mainland Chinese people to be cautious when depositing money in banks.
On May 9th, the China Banking and Insurance Regulatory Commission issued a notice regarding matters related to commercial banks acting as agents for insurance business.
The notice mentioned three points: first, the removal of limitations on the number of insurance companies that commercial banks’ branches and network points can cooperate with. They are now allowed to collaborate with multiple insurance companies for various insurance services. Second, it requires insurance companies to cooperate with commercial banks through written agency agreements signed by both entities. Third, it specifies the commission standards for bank agency services.
In the 2019 “Notice on Issuing the Management Measures for Commercial Banks Acting as Agents for Insurance Business” by the China Banking and Insurance Regulatory Commission Office, Article 39, Paragraph 2 stipulates that each commercial bank network point can only cooperate with up to 3 insurance companies for insurance agency services within the same fiscal year.
In response to this, an accredited knowledge domain creator known as “Uncle Qishan Rises Again” expressed concerns in a commentary on May 19th, suggesting that banks might turn into concentration camps for insurance companies because they are the best distribution channels, especially at branch network points.
“Uncle Qishan Rises Again” explained that most of the elderly customers who visit bank branches for transactions are wealthy with plenty of spare time, and their ability to discern is usually low. With just a bit of persuasion from salespeople, insurance products could be exaggerated, potentially leading to them switching their intended bank deposits to purchasing insurance. With restricted investment opportunities and narrowing interest rate spreads, banks are likely to aggressively promote insurance services as they earn fees as intermediaries, regardless of the insurance quality. The safety and returns of the insurance schemes are not in any way related to the bank, but the risks are high.
“Uncle Qishan Rises Again” also suggested that news about individuals being deceived into buying insurance while depositing money at banks will increase in the future. They warned those with elderly family members to be cautious, recommending using mobile banking services to minimize unnecessary visits to physical bank branches to avoid falling into such traps.
Regarding the reason for the China Banking and Insurance Regulatory Commission canceling the limitation on the number of insurance companies banks can collaborate with, “Uncle Qishan Rises Again” believed it was primarily due to most of the public depositing their money in banks, resulting in no consumer spending or corporate loans. As banks are unable to lend out the funds deposited, losing potential interest margins, the deposits could become liabilities rather than assets. Despite the lowering of interest rates by the People’s Bank of China, the public’s inclination to save persists, with everyone being cautious about potential economic uncertainties.
This article has sparked resonance among internet users, with many cautioning the public against falling prey to such practices.
“Never Take Anything Seriously” remarked, “All financial products in China are traps. Don’t believe it? Try them out. They neither benefit you nor compensate for losses. Ten years ago, my endowment life insurance matured, and surprisingly, it resulted in a loss. It was even recommended by a relative. No more trust in such schemes.”
“Lime” stated, “Should the common people bear these risks so that banks can have good days? In how many media reports have we read about people, both young and old, being coaxed into financial products and insurance schemes at banks, only to find out they cannot access the funds when urgently needed? Isn’t this a form of fraud? How can the rights of ordinary citizens be protected?”
“Clear Skies After Rain” offered a suggestion, advising individuals to continuously emphasize to bank personnel that they are only interested in depositing money, and not other financial products. Insist on depositing funds solely into the account through digital means, avoiding physical signatures or thumbprints. If requested to sign or provide fingerprints on any document, immediately report the incident to the police, expressing concerns about potential fraud attempts by the bank. Once the police are involved, document all transactions made that day through screenshots or videos on a phone, including the date and details, for future reference in case of any dispute or change in the transaction nature. However, extreme caution must be exercised to verify the authenticity of the law enforcement officers.
Let it be reminded once more to stay vigilant when dealing with financial products and services to protect your assets and interests from potential risks and fraud.