Ant Fortune’s new investment advisory service was axed less than ten days after its launch due to compliance concerns, according to a local media report.
The series of financial products, named “Golden Choice Investment Consultants”, was launched by Ant Group in partnership with six financial institutions: Aegon-Industrial Fund, Southern Asset Management, Zhong Ou Asset Management, GF Fund Management, Harvest Wealth and Caitong Securities. . . It was available for Alipay’s billion users.
The securities firms’ six fund managers have designed more than ten investment portfolios based on Alipay-selected mutual funds, each promising at least 13% annualized returns, according to a Chinese economic newspaper 21st Century Business Herald reported.
The service was removed this week because Ant Group does not hold a fund rating license, which is required by law for an entity to publicly rate and share information about the investability of financial instruments, according to Herald of 21st century business.
Alipay maintains a set of “golden funds” that it endorses as top-notch investment choices that will yield good returns for its users. These “golden funds” were the building blocks of Golden Choice Investment Consultants’ offerings. Industry insiders speculate that these products have been taken offline because they do not meet regulatory requirements, given the lack of a fund rating license by Ant Group.
“Financial institutions should have created their own fund library and implemented due diligence, but Alipay took care of that. Alipay is not qualified to rate or review funds. Its assessment of the pool of ‘golden funds’ may lead to compliance complications,” said a mutual fund expert. 21st Century Business Herald.
Fund advisory is a relatively new form of financial service in China. The country’s top securities regulator, the China Securities Regulatory Commission (CSRC), launched a pilot project in October 2019 to test advisory services for mutual fund investment opportunities.
Information from the Asset Management Association of China shows that there are currently seven licensed fund rating agencies in China. Additionally, three media companies also hold the same license. Ant and its partner companies are not on the list, meaning they are not authorized to issue investment endorsements or fund ratings to consumers, although they may design financial instruments.
The dismantling of Alipay’s investment service is the latest development in a series of significant changes that have altered the operational scope of the platform. In September 2021, Huabei and Jiebei, Ant’s highly profitable consumer lending businesses, were removed from Alipay.
China’s central bank, the People’s Bank of China, then asked Ant to hand over its treasure trove of user data to a state-backed credit rating firm. In November 2021, Alipay added privacy features after the regulator said the app “collects personal information excessively”.
The government has also asked the company to “rectify” its insurance and financial management businesses to comply with the regulations. Xiang Hu Bao, the only major platform remaining in China’s self-help market after regulators suspended competitors, will shut down at the end of January.
