"Banking and payment integration" upgraded again: regulatory authorities draw multiple red lines

Ask AI · How new rules further refine fee management to prevent violations?

Since the beginning of this year, personal insurance companies have seen a significant increase in new single premiums through the bank-insurance (bank distribution) channel. While the channel has returned to being the industry’s top sales channel, it has also become the main engine for growth in new business value, achieving simultaneous growth in both scale and value. However, as the business enters a “fast track,” some sales that are not compliant and potential risks in fee management have once again started to show. In response, regulatory authorities have taken decisive action to further strengthen fee controls.

Reporters learned from industry sources that recently, the National Financial Regulatory Administration issued the “Notice on Further Strengthening Fee Management for Bank-Agency Distribution Channels” (hereinafter referred to as the “Notice”) and the supporting “Questions and Answers on Matters Relating to Fee Management for Bank-Agency Distribution Channels (I)” (hereinafter referred to as the “Q&A (I)”), to strengthen regulatory oversight of bank-Agency distribution channel business, continue to deepen the “report to the regulator and align with implementation” reform in bank-insurance (“bao-xing yi-ti yi”)—and further implement the management responsibilities of insurance companies.

So-called “report to the regulator and align with implementation” means that when an insurance company actually sells a product, the commission payment standards must be exactly the same as the standards submitted to the regulator when the product was initially filed and reported.

To prevent the industry from returning to the vicious path of competing on commissions in its growth, the “Notice” has made strong additions to prior policies. The “Notice” clearly requires that when filing and reporting products for bank-Agency distribution channels, insurance companies must, in accordance with the requirements of the intelligent validation system for personal insurance product filings, separately report commission levels paid to banks, salary incentive pay for bank-insurance specialists, training and customer service fees, and allocated fixed expenses levels. When insurance companies carry out business through bank-Agency distribution channels, they must execute the fee policy according to the actuarial report of the product that has been filed. Any fee expenditures must obtain real, lawful, and effective supporting documents.

The “Notice” requires that “report to the regulator and align with implementation” compliance management be incorporated into the insurance company’s internal performance evaluation and accountability mechanism:

• The board of directors of the insurance company shall, at least once each year, hold a special session to hear reports on “report to the regulator and align with implementation”;

• The general manager is responsible for “report to the regulator and align with implementation” work;

• The chief actuary is responsible for product design;

• The person in charge of finance is responsible for matters related to financial management;

• Senior management personnel overseeing bank-Agency distribution channels are responsible for the authenticity and compliance management of fee expenditures for bank-Agency distribution channels and the conduct of business-promotion activities;

• Main responsible persons at all levels of branch institutions are responsible for “report to the regulator and align with implementation” work at the relevant branch institutions.

In response to prior industry issues where “workarounds” and gray areas were prone to occur, the supporting “Q&A (I)” further makes additional standardization. It requires that insurance company institutions at all levels establish ledger management for business-promotion activities, record information item by item such as time, location, institutions, and personnel, and attach relevant supporting documents. Insurance companies must obtain real, lawful, and effective supporting documents, and account for expenses for business-promotion activities as training and customer service fees; they must truthfully list expenditures for incentive plan items. Among them, the remuneration and rewards paid to bank-insurance specialists must be included in the salary and remuneration management of bank-insurance specialists. Insurance company institutions at all levels must standardize the formulation of incentive plans; after approval by the main responsible person of the provincial-level institutions or the person in charge of the head office, provincial-level and below branch institutions may implement the incentive plan; after approval by the general manager, the head office may implement the incentive plan.

The “Q&A (I)” specifically draws multiple “regulatory red lines”:

• Insurance companies may not require or imply that bank-insurance specialists use their compensation to carry out business-promotion activities;

• Insurance companies must truthfully account for fees advanced by bank-insurance specialists to provide bank-Agency distribution channel services and include them in training and customer service fees; they may not distribute relevant amounts under the name of bank-insurance specialists’ compensation;

• Insurance companies must, according to the principle of “who benefits, who bears the cost,” and in accordance with relevant institutional provisions, reasonably allocate joint expenses such as those arising from jointly conducting business-promotion activities through multiple channels to bank-Agency distribution channels, and may not transfer fees to other channels in ways such as not allocating or allocating too little.

On the inspection front, the “Notice” requires that local dispatched institutions continue to conduct on-site inspections of “report to the regulator and align with implementation,” establish an industry notification mechanism for “report to the regulator and align with implementation” violations and typical cases, and promptly report relevant situations to the insurance group and its legal-entity institution regulatory departments.

Looking back at the policy timeline, “report to the regulator and align with implementation” for bank-insurance distribution channels has been rolled out since 2023. In August 2023, the National Financial Regulatory Administration issued the “Notice on Regulating Insurance Products for Bank-Agency Distribution Channels,” which constrained bank insurance channel commissions. In January 2024, regulators again issued to the industry the “Notice on Matters Concerning Regulating Bank-Agency Distribution Channel Business of Personal Insurance Companies,” strictly prohibiting insurers from paying additional expenses off the books in secret under names such as issuance fees and information fees.

Industry insiders say that the issuance of this “Notice” and the accompanying Q&A signifies that regulatory governance of bank-insurance channels is moving from macro-level commission restrictions toward micro-level refined management and full-chain, penetration-style accountability. This will promote healthier, more sustainable, high-quality development of bank-insurance channels in 2026.

Source: Financial Times Client

Reporter: Sun Rong

Editor: In-language Cloud Yang