New regulations released! Personal loan interest and fees will be publicly disclosed, and any undisclosed fees are prohibited, effective August 1 | Big Fish Finance

The "hidden interest and fees" chaos in the personal loan market may be fundamentally resolved. On March 15, according to the official website of the National Financial Regulatory Administration, the National Financial Regulatory Administration, in conjunction with the People's Bank of China, jointly issued the "Regulations on the Explicit Comprehensive Financing Costs of Personal Loan Business" (hereinafter referred to as the "Regulations"), which clearly states that starting from August 1, 2026, all personal loan businesses must present the annualized comprehensive financing costs to borrowers through a unified "explicit table," making the various interest and fees of personal loans "sunshine" and "transparent." A relevant official from the Financial Regulatory Administration recently stated: "In recent years, China's personal loan market has developed rapidly, but there have also been some irregularities and transparency issues in the disclosure of interest and fee information for personal loan businesses, which not only easily leads to financial consumer disputes but also affects the effectiveness of interest rate policies and weakens the quality and efficiency of financial services to the real economy." Against this backdrop, it is very important to formulate and implement relevant regulatory provisions to address the chaos in the personal loan sector. In recent years, the personal loan market has been plagued by various irregularities. For example, in the microloan market, borrowers need to sign loan contracts with lending institutions that specify the interest, but they also have to sign guarantee contracts with financing guarantee companies to enhance credit. Similar situations of charging guarantee fees exist in second-hand housing loans, even though the second-hand houses already have property mortgages. Additionally, some platforms require borrowers to pay the platform in the form of card purchases or prepaid consumption, similar to "head-cutting interest." Furthermore, there are some unscrupulous loan intermediaries who charge borrowers high fees under various so-called "consultation fees." The "Regulations" will be implemented starting August 1 of this year, at which point the personal loan market will be reshaped. The "Regulations" consist of 11 articles, which clearly require lenders to present a comprehensive financing cost explicit table to borrowers, clearly disclosing the costs of personal loan interest and fees. It also points out that all costs related to personal loans should be included in the comprehensive financing costs, including but not limited to the loan interest, installment fees, credit enhancement service fees, and other financing costs that borrowers need to pay under normal performance conditions, as well as overdue penalty interest and other contingent costs that need to be paid in the event of default. Borrowers should pay attention to the comprehensive financing costs when handling personal loan business and fully understand the financing cost items, collection methods, collection standards, annualized levels, collecting entities, and default liabilities. At the same time, the "Regulations" require lenders to strengthen the management of cooperative institutions in areas such as marketing and customer acquisition, and credit enhancement, clearly defining the responsibilities and obligations of all parties to implement the explicit requirements for comprehensive financing costs in the cooperation agreements signed with cooperative institutions. It is worth mentioning that the term "lender" in the "Regulations" refers to financial institutions and local financial organizations such as commercial banks, rural cooperative banks, rural credit cooperatives, auto finance companies, consumer finance companies, corporate group finance companies, trust companies, and microloan companies Zeng Gang, Chief Expert and Director of the Shanghai Financial and Development Laboratory, pointed out that the introduction of the "Regulations" is an important measure to optimize the consumer finance environment and has multiple positive implications for the current promotion of consumption. Firstly, transparency forces price reductions, directly alleviating the burden on consumers. In the past, some lending institutions commonly used vague terms such as "daily interest" and "monthly interest," hiding implicit charges like service fees and handling fees, resulting in consumers bearing financing costs far exceeding expectations. After the mandatory disclosure of the annual comprehensive cost, price competition among institutions is expected to become more sufficient, potentially driving down consumer loan interest rates and substantially lowering the borrowing threshold for residents. In addition, information symmetry boosts confidence and activates potential consumption willingness. Consumers can clearly compare the real interest rates of various institutions, making more rational decisions and reducing borrowing concerns arising from information opacity, which helps convert potential consumption demand into actual purchasing behavior. Furthermore, the "Regulations" can standardize market order and solidify the foundation for long-term consumption. The new rules help curb industry chaos and guide the consumer finance market towards health and order, fundamentally enhancing the activity and sustainability of the consumption market. Regarding how to steadily promote the implementation of the comprehensive financing cost disclosure for personal loans, officials from the Financial Regulatory Administration and the People's Bank of China stated that to ensure the "Regulations" are implemented smoothly and effectively, a series of measures have been taken. Considering the practical needs for lenders and their related partner institutions to adjust business processes and systems, modify cooperation agreements, revise internal management systems, and conduct policy training, approximately 5 months have been reserved for implementation preparation. To promote the standardized operation of comprehensive financing cost disclosure, based on the relevant requirements of the "Regulations," the Financial Regulatory Administration and the People's Bank of China have organized the creation of sample forms for comprehensive financing cost disclosure, as well as examples of comprehensive financing cost disclosure on installment payment pages in online consumption scenarios, which will be distributed to various lending institutions in an appropriate manner as soon as possible. At the same time, the Financial Regulatory Administration and the People's Bank of China will guide relevant industry associations and self-regulatory organizations, such as the China Banking Association, the China Internet Finance Association, and the Market Interest Rate Pricing Self-Discipline Mechanism, to play their role in industry self-discipline, further refine industry execution rules based on actual work needs, and provide support for the implementation of various work requirements. Reporter: Su Ran Editor: Liu Yu Proofreader: Liu Tian