The National Financial Regulatory Administration (NFRA) has issued the "Provisions on the Management of the List of Seriously Dishonest Entities (Trial)" (hereinafter referred to as the "Provisions"), which will take effect from October 1, 2026.
This move aims to implement the decisions and arrangements of the Party Central Committee and the State Council on improving the social credit system, standardize the management of the list of seriously dishonest entities in the financial sector, and maintain good order in financial markets.
The "Provisions" consist of 31 articles, primarily covering the following key areas.
Defining the Scope for List Inclusion
The regulations prudently define the scope for inclusion on the list. Entities such as financial institutions and their practitioners who are subject to administrative penalties or other measures imposed by the NFRA or its local offices, and whose violations are deemed particularly egregious and serious in nature, will be included in the list of seriously dishonest entities.
Specifying Management Measures for Seriously Dishonest Entities
Based on relevant laws, regulations, and policy documents from the Party Central Committee and the State Council, the "Provisions" specify the management measures that the NFRA and its local offices may take against entities included on the list.
Strictly Standardizing List Management Procedures
The procedures for adding entities to or removing them from the list are clearly defined. The regulations also stipulate procedures such as prior notification and the right to statement and defense, fully safeguarding the related entities' rights to be informed and to defend themselves.
Establishing a Credit Restoration Mechanism
A credit restoration mechanism is established to encourage seriously dishonest entities to correct their dishonest behavior and mitigate negative impacts. The conditions for early removal from the list and the verification period are specified.
Notably, the "Provisions" clarify three specific types of circumstances that will lead to inclusion on the seriously dishonest entities list.
The first type involves administrative penalties resulting in "the legal person entity having its business or operational license revoked, having lifetime qualifications cancelled or revoked, being permanently banned from working in the banking industry, or being permanently prohibited from entering the insurance industry."
The second type pertains to cases where entities, due to committing one of six specified behaviors, receive heavier administrative penalties or face restrictions such as market access limitations, orders to transfer equity, or revocation of administrative licenses, thereby seriously undermining fair market competition and normal social order.
The third type involves situations where a party has the capacity to fulfill obligations but refuses to do so or evades the enforcement of an administrative decision, seriously affecting the credibility of the financial regulatory authorities, and a compulsory enforcement ruling has been issued by a people's court.
Furthermore, the "Provisions" detail the conditions and procedures for credit restoration, encouraging parties listed as seriously dishonest entities to correct their behavior, eliminate adverse effects, and apply for credit repair.
Firstly, a party may apply for early removal from the list one year after being included, provided they simultaneously meet three specified conditions.
Secondly, the NFRA or its local offices will verify the application for early removal and decide whether to grant approval.
Thirdly, if it is discovered that an applicant for early removal intentionally concealed the true situation or provided false information, and the circumstances are serious, the decision for early removal from the list will be revoked.
According to a responsible official from a relevant department of the NFRA, the "Provisions" adhere to the principles of prudence and moderation, carefully defining the circumstances for list inclusion. Only behaviors constituting serious dishonesty in the financial sector are included; general dishonest behavior is not subject to management under this list.
The regulations also emphasize acting in accordance with laws and regulations, strictly standardizing list management procedures, safeguarding rights and interests, and establishing the credit restoration mechanism. They clearly outline measures to protect the rights and interests of parties, such as prior notification, service of documents, and the right to statement and defense, as well as relief mechanisms like applying for early removal from the list, including their applicable conditions and procedures. This fully safeguards the legitimate rights and interests of parties, including the right to prior knowledge, the right to statement and defense during the process, and the right to apply for credit restoration afterwards.
The issuance of the "Provisions" is understood to be a significant measure by the NFRA to further advance the construction of the social credit system. It is expected to help strengthen the crackdown on illegal and non-compliant activities, enhance the effectiveness of financial supervision, guide market entities to strengthen their awareness of honest operations, and promote the high-quality development of financial markets.
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