Since initiating a financial industry crackdown on "involution" (unfair competition) last year, Guangdong's financial sector is accelerating its shift away from the extensive, old path of competing on price and scale. On July 30th, the Guangdong Financial Regulatory Bureau released its latest progress report on curbing disorderly competition in the banking and insurance industries.
Mortgage and auto finance commission expenses have dropped by 89% year-on-year. As China's top economic powerhouse and a frontier of reform and opening-up, Guangdong boasts a diverse market, active business entities, and ample financial supply. The phenomenon of "involutionary" competition in the banking sector emerged earlier and is more characteristic here. In response, the Guangdong Financial Regulatory Bureau pioneered a "1+3+N" governance system nationwide last July. This system issued one negative list, three self-regulatory conventions, initiatives, and commitments against unfair competition, while simultaneously detailing self-regulatory standards for key business areas like auto finance and mortgage loans, fully launching a comprehensive campaign to rectify disorderly competition in Guangdong's banking industry.
In terms of supervisory methods, the Guangdong Financial Regulatory Bureau employs "black technology." Using digital tools for three-dimensional profiling, targeted penetration, and panoramic mapping, it closely monitors the three dimensions of "competing on scale, competing on terms, and competing on fees." It conducts penetrating screening of institutions with abnormal business growth, targets malpractices like rushing to meet deposit/loan targets at period-ends, illegally replacing other banks' existing deposits/loans, lending below industry self-regulatory standards, illegal rebates for lending, and high commissions for auto loans, effectively tracking disorderly competition. The Foshan branch within the jurisdiction has also established an abnormal information sharing database for risk points such as abnormal personnel turnover, abnormal agency cooperation, centralized operations from abnormal IP addresses, and abnormal dissemination of misleading information on self-media, effectively filling traditional regulatory blind spots.
Illegal loan intermediaries and the financial "black and grey" industry are significant external factors exacerbating disorderly competition among banks and creating industry chaos. The Guangdong Financial Regulatory Bureau, in collaboration with public security authorities, has pushed forward centralized rectification of intermediary chaos in the financial sector and cluster crackdowns on "black and grey" industry crimes. Multiple typical cases of illegal loan intermediaries have been solved this year. In the first half of this year, results began to emerge. The net interest margin (NIM) of banks within Guangdong's jurisdiction has stabilized and recovered. Rebate ratios have returned to a reasonable range, cooperation with intermediaries has become more standardized, and commission expenses for housing mortgages and auto finance have dropped dramatically by 89% year-on-year. Operational quality and efficiency have steadily improved, with the overall industry's operations becoming more rational.
Precision Rectification of 'Involutionary' Competition in Auto Insurance
The insurance industry has also delivered impressive results. In the first six months of this year, insurance companies within the jurisdiction paid out 123.616 billion yuan in claims, a year-on-year increase of 2.83%. The comprehensive auto insurance loss ratio rose by 3.1 percentage points year-on-year, meaning more real money was paid to consumers. Meanwhile, the comprehensive cost ratio for property insurance companies decreased by 0.12 percentage points year-on-year, and the comprehensive expense ratio fell by 1.81 percentage points. In the life insurance sector, the business structure has been optimizing. The premium share of floating-return products increased by 18.5 percentage points compared to the same period last year, effectively mitigating the industry's risk of interest rate spread losses. Claims processing efficiency is also accelerating. In the first half of 2026, the average payment cycle for auto insurance claims across the industry was 23 days, five days shorter than the national average. The settlement cycle for claims under 10,000 yuan was 10.74 days, continuing to shorten year-on-year.
Given the large number of motorcycles in the jurisdiction, their high loss ratios, and low willingness of institutions to underwrite them, the Guangdong Financial Regulatory Bureau guided the industry to establish a risk-sharing mechanism for motorcycles, effectively solving the underwriting difficulty. In the first half of 2026, insurance institutions within the jurisdiction underwrote 3.2169 million motorcycles, a year-on-year increase of 12.72%. Additionally, the Bureau supported the establishment of co-insurance pools for marine ranching aquaculture insurance, facility equipment insurance, and commercial spaceflight insurance, establishing a scientific risk-sharing mechanism to enhance the industry's underwriting capacity and eliminate low-price bidding and vicious competition. Auto insurance is a severely affected area of "involutionary" competition. Therefore, the Guangdong Financial Regulatory Bureau continuously optimizes the commercial auto insurance rate mechanism, guides the reasonable reduction of the upper limit of commission rates with rigid enforcement, and strictly prohibits disguised breaches of regulatory requirements by falsifying expenses. It has established an auto insurance business tracking and monitoring mechanism, promptly issuing warnings and requiring corrections from abnormal institutions within a set timeframe. It has strengthened on-site inspections and the application of results. In the first half of 2026, 130 instances of institutions had their commercial auto insurance policy terms suspended for regulatory violations, leading to a continuous improvement in the auto insurance market order.
Comments