Although US President Obama is facing opposition in proposing a new consumer financial protection agency, no one doubts that safeguarding consumer interests is critical to restoring order to a financial system battered by the global economic downturn.

From excessively complex derivative products that contributed to the huge losses of global investors to massive mortgage loan and credit card defaults that eroded the financial sector, many abusive practices could find their roots in anti-consumer behavior.

Chinese top banking regulators are considering a consumer protection plan to ensure that customers are consistently treated fairly when receiving services from domestic banks.

A one-year initiative, which began in September, will focus on developing guidelines to regulate banks' practices in offering consumer financial services and forming relevant self-disciplinary agreements throughout China's entire banking industry.

"Treating consumers fairly is in line with the long-term goal of maintaining the healthy development of the Chinese financial industry," said Liao Min, chief spokesman for the China Banking Regulatory Commission (CBRC), the nation's top banking regulator.

The current global financial crisis made it apparent that insufficient protection of consumers' financial interests could pose a significant threat to the stability of the financial system, he said.

Liao further stressed the importance of transparency, since financial products provided today have become increasingly complex and sophisticated.

"If consumers find they were hurt by unfair treatment, they will lose confidence in the financial marketplace, which could lead to the pileup of systematic risk," he said.

CBRC has unveiled numerous measures to govern domestic commercial banks' wealth management business since 2005.

The measures include two guidelines issued early this year after the outbreak of the global financial crisis.

Liao said the consumer protection plan will result in comprehensive guidelines to regulate commercial lenders' consumer financial services.

One outcome of the one-year initiative will be to map out comprehensive guidelines regulating a variety of consumer finance products and services by domestic lenders.

The China Banking Association will then mobilize its member financial institutions to reach self-disciplinary agreements on treating consumers fairly and transparently.

"With people's increasing awareness about protecting their rights, it is of great importance to promote the concept of fairness, transparency and accountability," said Yang Zaiping, executive vice-president of the China Banking Association, an industrial membership organization.

Other participants in the program include insurance and security regulators and the China Consumers Association.

The project also received support from the British Embassy to China.

(China Daily November 2, 2009)