Two Government Departments Release "Disclosure Regulations for Comprehensive Financing Costs of Personal Loan Business," Promoting Transparency and Sunlight Policy for Loan Costs

Everyday Economic Reporter | Yuan Yuan Everyday Economic Editor | Dong Xing Sheng

On March 15, the Financial Regulatory Administration announced on its official website that the State Administration of Financial Supervision and the People’s Bank of China issued the “Regulations on Clear Disclosure of Comprehensive Financing Costs for Personal Loan Business” (hereinafter referred to as the “Regulations”), to address issues of non-standardized and non-transparent disclosure of interest and fee information in personal loan services.

The Financial Regulatory Administration stated that, considering the need for lenders to adjust business processes and systems, and to modify cooperation agreements, the Regulations will take effect on August 1, 2026. Relevant parties should prepare accordingly in accordance with the Regulations. When the Regulations come into force, following the principle of “new and old separation,” new business activities must strictly adhere to the requirements for clear disclosure of comprehensive financing costs.

The comprehensive financing cost disclosure form should include the loan principal and each interest and fee item

In recent years, China’s personal loan market has developed rapidly, playing a positive role in promoting personal consumption, business operations, and supporting steady and healthy economic growth. At the same time, irregularities in interest and fee disclosures, especially in internet lending, have occurred from time to time. According to industry insiders, inadequate and non-standardized disclosure of interest and fee information, and insufficient protection of consumers’ right to be informed, are major causes of these issues.

Against this background, the Regulations refine the scope, operational methods, and procedures for interest and fee disclosures within the existing regulatory framework for loan information disclosure. They require lenders to present borrowers with a clear disclosure form of comprehensive financing costs. Notably, the “comprehensive financing cost” here refers to all interest and fees borne by the borrower related to the loan, including normal performance costs as well as potential costs such as late payment penalties and default-related fees.

The Regulations specify that the disclosure form should state the loan principal amount, itemize each interest and fee charged by the lender and its partners, including the collection method, standard, and responsible party. Based on this, the form should also calculate the annualized comprehensive financing cost under normal repayment conditions. Additionally, it should list potential costs and their standards and responsible entities in cases of default, such as late payments or misappropriation. The interest and fee standards for normal repayment should be converted into annualized rates according to requirements like the “Announcement of the People’s Bank of China” ([2021] No. 3). The disclosure form must also clearly state that, aside from the costs already disclosed, no other interest or fees related to the loan will be charged by the lender or its partners.

Furthermore, the Regulations provide operational requirements for three major scenarios: on-site personal loan processing, online personal loan processing, and online consumer installment payments. For online personal loan services, the comprehensive financing cost disclosure form should be displayed via a pop-up window, with a mandatory reading period, and the borrower must confirm before signing the loan agreement or proceeding with installment payments.

Officials from the relevant departments of the Financial Regulatory Administration and the People’s Bank of China stated: “To promote standardized operation of the comprehensive financing cost disclosure, we have developed sample disclosure forms and examples of the online installment payment scenario. We will also guide industry associations such as the China Banking Association, the China Internet Finance Association, and the Market Rate Pricing Self-Regulatory Mechanism to play their roles in industry self-discipline and support the implementation of these requirements.”

Experts: Better Protect Consumers’ Right to Know and Choose

Considering that lenders need time to adjust their processes, systems, and modify cooperation agreements, the Regulations will be implemented on August 1, 2026, providing about five months for preparation. When the Regulations are enforced, new business activities will strictly follow the requirements for clear disclosure of comprehensive financing costs, following the “new and old separation” principle.

Meanwhile, the Financial Regulatory Administration and the People’s Bank of China will further implement the concept of serving the people, strengthen coordination between central and local regulators, and guide the proper implementation of the Regulations to better protect the legitimate rights and interests of financial consumers and support high-quality economic and social development.

The reporter notes that during the China Central Bank’s work conference held on January 5-6 this year, the promotion of clear disclosure of personal loan comprehensive financing costs was emphasized. Experts at that time pointed out that promoting such disclosure has multiple positive implications: first, it helps address the information asymmetry in personal credit; second, it better safeguards consumers’ right to be informed and to choose; third, it standardizes the loan market order and fosters a healthy financial ecosystem.

Now, with the issuance of the Regulations, a specific timetable for implementing the disclosure of comprehensive financing costs for personal loans has been established. Senior researcher Su Xiaorui from Su Xi Zhi Yan said that the emphasis on disclosure of comprehensive financing costs aligns with previous regulations on loan rates and can also strengthen consumers’ right to be informed through financial marketing and publicity, ensuring their legitimate rights are protected.

“Looking at the actions of regulatory interviews with loan platform operators before ‘3.15’, whether in marketing, fee disclosure, or complaint mechanisms, all point to the focus on protecting financial consumers, indicating that consumer protection has become a top priority in personal lending,” Su Xiaorui stated. “This also signals that consumer protection is not only the responsibility of licensed financial institutions but also a key obligation of lending platforms, which must comply with regulations and ensure consumer protection is integrated into all stages of the loan process.”