With the current bank deposit interest rate being lowered several times in a row, residents' enthusiasm for purchasing wealth management has increased. For most ordinary financial investors, the primary goal of financial management is to maintain and increase the value of assets, especially in terms of "value preservation".
So, for wealth management products, is there a "principal-protected" product? Can the so-called "guaranteed return clause" of wealth management products become a hard armor for investors to protect their capital? If it fails, does the investor have to "pay for the whole thing" for the loss? The Financial Times reporter asked relevant experts from the Beijing Financial Court to reply to relevant questions.
ask
When choosing a wealth management product, some salesmen will mention that the wealth management product will have a "minimum guarantee clause". What is a "Minimum Guarantee"? Is it really guaranteed with it?
answer
The minimum guarantee clause is a clause that the trustee will recover part or all of the investment principal or interest for the entrusted wealth management, regardless of profit or loss. In daily life, when someone sells us capital-guaranteed wealth management products, they usually use gimmicks such as guaranteeing no loss of principal, guaranteeing fixed income, ensuring that the loss of principal does not exceed the upper limit, and the trustee shall bear the responsibility for the excess part.
Because the guarantee clause transfers all or most of the investment risks to the trustee, it is contrary to the law of financial development, unreasonably increases the responsibility of the trustee, violates the principle of fairness and justice, and disrupts the basic order of the financial market. Therefore, the judicial authorities usually consider that the minimum guarantee clause violates the provisions of Article 153 of the Civil Code and is invalid.
For most investors, buying wealth management products always expects high returns, but never accepts any loss of principal. As junior investors in the financial market, they generally lack investment experience and have weak anti-risk ability. Therefore, most of the wealth management products they choose are guaranteed wealth management products to ensure that they can realize that the principal of their investment can be realized without any loss, and it is best to reap a higher return than the deposit interest rate. However, when buying such products, the staff directly or indirectly promises that the guarantee of wealth management products is invalid, so do not believe that the guarantee clause of wealth management products is the "armor" of capital protection, or buy financial products that are appropriate for their own risk ability to prevent being fooled.
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So, once the loss really occurs, will the investor bear it?
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High yield also means high risk, when purchasing, it is necessary to pay attention to whether the seller/trustee of the wealth management product accurately introduces the product, and the buyer as an investor should also identify the risk situation of the wealth management product, and be prepared to bear the loss when it occurs.
In the event of a loss, the seller/contractor who has failed to fulfill its responsibilities will still be liable for compensation according to the degree of fault, even if the agreed principal protection clause is invalid. With regard to the criteria for determining whether a financial institution is liable, the court will examine the criteria for whether the financial institution has fulfilled its suitability obligation to determine the degree of fault.
The first step from a novice to an intermediate investor is to pay attention to the terms of the contract signed, which focuses on the terms of liability, risk burden and income distribution. Article 87 of the Securities Investment Fund Law of the People's Republic of China stipulates that non-publicly offered funds shall be raised from qualified investors. In other words, for small and medium-sized investors, while bearing the high risk, the seller, as the seller, also bears the obligation of "seller's due diligence", and when the investment is lost, if the seller fails to prove that it has fulfilled the suitability obligation of diligence, even if the minimum guarantee commitment is invalid, it will also bear the investment loss.
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What kind of terms can really be guaranteed?
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Some prudent investors who attach importance to asset preservation may be worried about whether there is no real guaranteed financial management in the future. In fact, what we have said above is the ex-ante principal protection clause, which is a commitment made before the investment. However, if the two parties re-agree on the issue of loss burden after the loss has occurred, the clause that the trustee bears all the losses is not a pre-guarantee clause, but a loss burden clause. So, what is the difference between the above clause and the ex-ante minimum guarantee clause? In terms of the function of the clause, the function of the loss burden clause agreed upon by the parties after the occurrence of losses is different from that of the ex-ante guarantee clause, and the rights and obligations determined by this clause generally only have a substantial impact on both parties to the agreement. The Beijing Financial Court upheld the above view in the case and upheld the investor's claim for compensation for investment losses based on the time-lapse liability clause after the minimum guarantee clause was invalid. Therefore, for investors who pursue the ultimate capital preservation, it is necessary to pay attention to actively communicate with the trustee and retain evidence of the corresponding loss burden in case of loss, so as to assert their legitimate rights in the lawsuit.
Financial Court Tips:
The Trust Law of the People's Republic of China, the Interim Measures for the Supervision and Administration of Securities Investment Funds, the Interim Measures for the Supervision and Administration of Private Investment Funds and other laws and regulations have a negative attitude towards the validity of the provisions of the guarantee of minimum returns. Because the guarantee clause transfers all or most of the investment risks to the trustee, it is contrary to the law of financial development, unreasonably increases the responsibility of the trustee, violates the principle of fairness and justice, disrupts the basic laws and trading rules of the financial market, and further disrupts the basic order of the financial market.
Therefore, when the judicial authorities determine the validity of the clause of guarantee of minimum income made by trust companies, commercial banks and other financial institutions, they will usually consider that the clause violates the provisions of paragraph 1 of Article 153 of the Civil Code of the People's Republic of China and is invalid. After the guarantee clause is invalid, it does not mean that the seller/trustee does not need to bear any liability, and the seller/trustee should provide evidence to prove that it has fulfilled its suitability management obligations, otherwise it should still bear the liability for the losses of investors.
The Financial Court reminds investors that when purchasing financial products, they should accurately evaluate their own risk tolerance, understand and assess the risks related to the purchase of the investment products involved in the case, and submit the application form, risk tolerance questionnaire and other assessment documents related to their own risk tolerance. At the same time, after the occurrence of investment losses, actively communicate with the seller/trustee to determine whether an agreement can be reached on the issue of investment loss burden.
Although the minimum guarantee clause is not the "armor" for small and medium-sized investors to invest in capital preservation, it certainly will not become a "weakness" for investors in the face of non-fulfilling sellers/trustees to shirk their investment risk responsibilities. Investors should keep their eyes open when buying wealth management products, and should not believe in the other party's guarantee commitment and buy wealth management products.
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Source: Financial Times client
Reporter: Ma Meiruo
Correspondent: Shi Yubing
Editor: Duan Jiaxi
Email: [email protected]