Text/Qin Ting, senior editor of Tsinghua Financial Review
Recently, some media reported that the Wealth Management Business Special Committee of the China Banking Association convened a seminar to discuss the research and formulation of the Code of Conduct for Displaying Past Performance of Wealth Management Products. It is understood that the Code of Conduct for the Display of Past Performance of Wealth Management Products sets three basic requirements, three display requirements and three prohibited behaviors for the past performance display of wealth management products, and sets specific requirements for the product performance display of each period. This means that the past performance display of wealth management products will usher in a unified self-discipline standard.
Past performance display refers to the act of wealth management product sales institutions displaying, descripting, explaining, quoting, etc. of the past performance of wealth management products through forms or channels including but not limited to product promotion sales texts, websites, online banking, mobile apps and other forms or channels when carrying out sales business.
Since the implementation of net worth of bank wealth management products, many investors have reported that the performance of bank wealth management products has been displayed in the performance of bank wealth management products, such as "good news but not bad news", and different display time dimensions.
For example, the product "good news but not bad news", only shows the performance of the good performance range, and does not show the poor performance range. For another example, the income display of wealth management products has multiple time dimensions such as annualized in the past seven days, annualized in the past month, annualized in the past three months, and annualized in the past six months, which causes inconvenience to investors. More wealth management companies have modified the graphical method to make the fluctuation of wealth management product performance "seemly" reduced. In addition, some professional institutions often face difficulties when evaluating the income of wealth management products.
Industry experts said that the display of past performance should follow the basic principles of stability and internal logical consistency, and the display rules should not be arbitrarily changed, and should not be one-sided exaggerated or deliberately selective to avoid misleading investors. At present, the display of some institutional performance data is too complicated, which will undoubtedly interfere with investors' judgment of financial income and disrupt the order of fair competition in the industry.
At the end of December last year, the China Banking Association issued the Self-Discipline Code for Wealth Management Business in China's Banking Industry and the Code of Conduct for Displaying Benchmarks for Wealth Management Product Performance.
The "performance comparison benchmark" of wealth management products refers to the investment objectives and relevant explanations set by commercial banks or wealth management companies for wealth management products taking into account factors such as market environment, product nature, investment strategy, and past performance. "Performance benchmark display" refers to the listing, description, explanation, quotation and other behaviors of wealth management product performance benchmarks by wealth management product sales institutions through product promotion sales texts, websites, online banking, mobile apps and other forms or channels when carrying out sales business.
The research team pointed out that the performance benchmark is an important indicator to measure the relative return of wealth management products, and is the basis for consumers to judge product risk, investment style, product management level, etc.
The Code of Conduct for the Display of Wealth Management Product Performance Benchmarks clarifies that the display of wealth management product performance benchmarks should be scientific, reasonable, clear and easy to understand, and gives examples of wealth management product performance benchmarks. The example divides the performance benchmark of wealth management products into three categories: fixed value, interval value, and index.
The new regulations also regulate the display of past performance.
Set three display requirements
It is understood that the Code of Conduct for the Display of Past Performance of Wealth Management Products includes three display requirements.
First, when selecting a past performance display period, the start time and the end time of the range should be indicated, except for past performance display for the full fiscal year.
Second, the past performance display of wealth management products must meet the following requirements: if the wealth management product has been in operation for more than 1 month but less than 1 year, it should at least include the past performance calculated from the date of establishment of the product; If the wealth management product has been in operation for more than 1 year but less than 6 years, it should include at least the performance of all full fiscal years from the year of establishment of the product; Wealth management products that have been in operation for more than 6 years should include at least the performance of the last 5 full fiscal years.
Third, if the past performance and performance comparison benchmark of wealth management products are displayed, the past performance and performance comparison benchmark should be displayed at the same time.
At the same time, the Code of Conduct also proposes three prohibited acts:
First of all, it is not allowed to show the past performance of wealth management products that have been established less than 1 month ago. Except for cash management wealth management products, any past performance display range shall not be less than 1 month;
Secondly, the past performance of wealth management products should not be exaggerated or deliberately selectively displayed, and data sources and methods with comparability, fairness and accuracy should not be used to compare past performance.
Finally, the promotional sales text of wealth management products can only display the past average performance and the best and worst performance of the wealth management product or similar wealth management products of the Company. It is not allowed to display only the past performance of a specific range or part of a wealth management product. For wealth management products of the same type or series, the past performance of specific wealth management products or part of wealth management products shall not be displayed.
However, for the implementation of the Code of Conduct for Displaying Past Performance of Wealth Management Products, experts expect that there will be certain difficulties in rectification.
Industry insiders believe that if the rectification difficulty of the "Performance Comparison Benchmark Display Code of Conduct" is relatively small, then the rectification difficulty and pressure of the "Past Performance Display Code of Conduct" is obviously much greater. On the one hand, the rectification of the Code of Conduct for Performance Benchmarking Display is mainly initiated by wealth management companies, while the rectification of the Code of Conduct for Performance Display requires joint efforts by wealth management companies and sales agencies.
On the other hand, the current practical level of past performance display behavior is complicated, and these adjustments require a lot of time and effort. Bank wealth management products have problems such as a large number of products, a large number of periods, and different standards for net value disclosure, and it is still difficult to standardize. After the implementation of the new rules, it is urgent to redesign and integrate the performance display layout from the financial technology level.