最高院明确P2P平台责任

Caught between the volatile stock market and the crush of money market fund returns this year, many investors turned to P2Ps, online crowd-funding platforms, for higher yields. But the recent lending disputes have shook investor confidence.

The country's Supreme People's Court has come up with judicial interpretations to govern internet finance in China. How are these new regulations affecting the industry?

China's P2P lending market is one of the largest in the world. But unlike money market funds, P2P platforms have remained largely unregulated. CEO of ITOUZI says that the judicial interpretations clarified liabilities of different parties in the P2P lending process.

"More clarification means that more financial institutions including banks, trust and funds are willing to cooperate with P2P platforms. These cooperations include business cooperation, asset cooperation and risk management design cooperation. It has a positive impact on P2P companies," he said.

"The clarification of policies and regulations will increase transparency in the industry, so the effect "bad money driving out good money" will be largely reduced. This is a good thing for consumers and investors," said Nancy Liu, vice president, Crystal Stream.
 
To better supervise funds and manage cash flow, P2P companies are now required to set up custodian accounts with traditional banks. But banks are not required to guarantee the loans.

The judicial interpretation also states that operators of such platforms primarily function as intermediaries, not guarantors. Analysts say that although its not compulsory for P2P companies to guarantee lenders funds, many will continue to do so to increase credibility.

"The biggest risks are the guarantors. Some of these platforms set aside certain risk preparation funds, but the amount is far less than at banks and other financial institutions, so they don't actually have the ability to repay lenders when loans go bad. If a few big loans go bad, it can lead to bankruptcy of the entire platform," said Nancy Liu, vice president, Crystal Stream.

"Others use third party guarantors. These third party guarantors work differently with P2P platforms than with banks. There is usually not enough margin deposit. Many of the bankruptcies of P2P platforms we saw are because of things going wrong with these third party guarantors."

The trading volume of P2P platforms reached 250 billion yuan (around US$40 billion) in 2014, double the amount in 2013, according to the Internet Society of China, but 275 of them closed during the same year.