NEW YORK/PALO ALTO, U.S. -- Chinese authorities summoned 13 companies in the financial technology sector including Tencent Holdings and ByteDance for a "supervision interview" Thursday, as Beijing looks to further tighten regulations on the sector following its crackdown against Ant Group.
The aim of the interview, as in the case of Ant, was to prevent monopolies and the "disorderly expansion of capital," while also examining poor corporate governance, regulatory arbitrage and unfair competition, the authorities said. The companies summoned Thursday, with large-scale operations and considerable influence in the sector, epitomize some of these problems, the People's Bank of China -- the country's central bank -- said in a release.
Tencent owns WeChat Pay -- the leading rival of Ant Group, the fintech arm of e-commerce giant Alibaba Group Holding. Those summoned also include TikTok owner ByteDance, New York-listed financial services platform Lufax as well as the fintech arms of JD.com, Baidu, Meituan, Didi Chuxing and Ctrip.
Agencies including the PBOC, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission and the State Administration of Foreign Exchange held the talks, according to the central bank. Pan Gongsheng, deputy governor of the PBOC, presided.
While fintech companies have played an important role in improving the efficiency of financial services, the inclusiveness of the financial system and reducing transaction costs, the industry also has serious problems. Some financial services providers were operating without licenses, and some practices by the companies have caused unfair competition and violated consumer rights, regulators said.
The authorities put forward seven rectification principles in the meeting with the companies, of which the first was that all financial activities must fall under regulatory supervision. Another principle called for companies to "disconnect improper connections between payment instruments and other financial products." The requirements also include the need to break the monopoly of information, establish financial holding companies and ban senior executives from holding multiple positions across business functions to ensure the independence of the fintech's operations.
Beijing has accelerated efforts to tighten control over the country's fintech sector since it called off Ant's intended $37 billion initial public offering. Alibaba was recently hit with a record $2.81 billion antimonopoly fine.