On July 10th, the National Financial Regulatory Administration issued the "Provisions on the Management of the List of Entities with Severe Credit Violations (For Trial Implementation)" to further standardize the management of such entities within the financial sector.
The provisions, comprising 31 articles and set to take effect on October 1, 2026, aim to implement the decisions and plans of the Party Central Committee and the State Council for improving the social credit system. The objective is to regulate the management of the list of entities with severe credit violations, thereby maintaining good order in financial markets.
This move represents a significant step by the regulatory body to deepen the construction of the social credit system. It is designed to strengthen the punishment of illegal and non-compliant activities, enhance the effectiveness of financial supervision, guide market participants to improve their awareness of honest operations, and promote the high-quality development of financial markets.
The provisions stipulate that inclusion in the severe credit violations list adheres to a principle of prudence, targeting only acts of an exceptionally egregious and serious nature. General acts of non-compliance will not be included.
An official from the relevant department stated that the provisions are based on three principles: prudent moderation, legality and compliance, and the protection of rights. They carefully define the criteria for inclusion, strictly regulate the list management procedures, and establish a credit restoration mechanism to fully safeguard the parties' rights to information, statement and defense, and application for credit repair.
The provisions clarify three categories of circumstances warranting inclusion on the severe credit violations list. The first is receiving certain administrative penalties, such as revocation of business or operational licenses, cancellation or revocation of lifetime professional qualifications, or a lifetime ban from working in banking or entering the insurance industry.
The second category involves acts such as obtaining administrative approval through deceptive or corrupt means; forging, altering, or transferring financial institution business licenses; obtaining loans through fraudulent means; shareholders or actual controllers of Financial Institutions abusing shareholder rights or failing to fulfill obligations, causing severe harm to the institution, clients, or other shareholders; or organizing or participating in illegal fundraising or other illicit financial activities.
The third category pertains to parties who, after an administrative decision like a penalty is made by the regulator, have the capacity to fulfill obligations but refuse to do so or evade enforcement, seriously undermining the credibility of financial supervision, and against whom a court has issued a compulsory enforcement ruling.
For entities listed, the provisions specify that the regulator and its local offices may consider their status as a significant factor when reviewing administrative licenses, qualifications, or awarding government procurement projects and engineering tenders, in accordance with laws, regulations, and state policies.
Listed entities may also be designated as key supervision targets with appropriately increased inspection frequency, and may be ineligible for management measures based on good faith, such as the notification-commitment system.
Financial Institutions are permitted to query the severe credit violations list and may reference this information in their business activities, including investment and financing, credit granting, lending, and insurance.
Notably, the provisions simultaneously establish a credit restoration mechanism. According to the rules, a party listed for severe credit violations may apply for early removal from the list after one year, provided they have fulfilled the obligations stipulated in the administrative decision, proactively mitigated harmful consequences or negative impacts, and have not committed another act warranting inclusion.
The regulator will verify such applications and decide whether to grant early removal. If a party intentionally conceals facts or provides false materials in their application, the decision for early removal may be revoked, and they will be restored to the list, with the clock resetting on the removal period.
The provisions state that a party will be removed from the severe credit violations list three years after the date of inclusion, with the listing authority required to complete the removal within ten business days of the expiry date and lift the associated management measures.
Furthermore, the provisions encourage listed parties to correct their失信行为, eliminate negative impacts, and apply for credit repair.
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