Guarantee rights before educating investors

Updated: 2013-09-02 23:18

(chinadaily.com.cn)

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Only after investors have legal rights and the fairness of the market environment is guaranteed by law can authorities focus on risk and investor education, says an editorial in the 21st Century Business Herald. Excerpt:

The Chinese central bank has issued a strategy of national financial education. It said that financial institutions should strengthen financial education for investors and make sure they understand the risks.

What should not be left out of the risk and education proposal is a guarantee that the market trade environment will be fair, and that investors will have the right to information and freedom as well as the right to sue.

China’s financial market is far from mature. Many people are easy targets for banks and financial agencies that are promoting financial products.

Chinese people lack financial education. Many financial institutions are taking advantage of this to squeeze profits from the financially naive.

Such improper actions by financial institutions are not supervised and corrected by the rule-makers and market supervisors. As a result, many characterize financial products as a trap.

In a controlled-interest market, the benchmark yield can hardly cover the possible risks. If there is no effective legal protection and oversight, many investors will be at a disadvantage from the start.