Shanghai Securities Industry Association reports on the 2025 on-site inspection of self-regulatory standards for investment consulting agencies in Shanghai

On February 24, according to the Shanghai Securities Industry Association, the association conducted on-site inspections of some investment consulting institutions in Shanghai in April and November 2025 to assess their self-regulation compliance. The main issues found during the inspections are as follows:

1. Internal Control Systems and Compliance Management Issues

The inspections revealed that the examined institutions lack sound internal control systems, with weak actual enforcement and compliance awareness. They have not effectively managed compliance during business operations. For example, compliance personnel are generally insufficient, with some institutions having only 1.9% of employees in compliance roles; there is a serious imbalance between investment advisory staff and clients, with some institutions having only 11.4% of staff as advisors and an average of 2,383 clients per advisor; compliance training for staff is infrequent, and the content is not closely related to actual business, affecting training effectiveness.

2. Investor Suitability Management Issues

The inspections found that the institutions’ suitability management systems and training are incomplete. For example, they have not established suitability management policies; they do not categorize and grade products on sale; they do not conduct risk assessments of products or services to determine their risk levels; they do not perform regular self-inspections of suitability management implementation; some clients have undergone multiple risk assessments on the same day to achieve specific risk levels.

3. Customer Complaint Management Issues

The inspections revealed that some institutions have high customer complaint rates, with some refund ratios around 40%. Many institutions lack a comprehensive product refund mechanism, tend to prioritize marketing over product quality, have a severe mismatch between the number of advisors and compliance staff relative to clients, and have cumbersome refund procedures.

4. Marketing and Promotion Issues

The inspections found that some institutions engage in misleading marketing practices, such as exaggerating claims or misleading clients. For example, promotional materials are disseminated without compliance review; there are instances of exaggeration and inducement; past performance of products or services is allegedly overstated; there are inappropriate statements suggesting no risk (e.g., safety, guarantees, promises, insurance, hedging, high returns, risk-free); and some advertisements use positive client reviews as promotional content.

5. Client Follow-up Issues

The inspections discovered that institutions do not fully implement follow-up procedures as required. For example, some only conduct follow-up via electronic surveys; follow-up is not performed by dedicated personnel; there are no measures for managing abnormal follow-up cases; the follow-up process does not cover the entire service cycle; and the procedures, content, and requirements for client follow-up are not clearly defined.

6. Employee Conduct Issues

The inspections found that institutions have loose control over employee conduct, with some staff engaging in violations. Some institutions have not established sound risk deposit systems, and penalties for violations are superficial. For example, some staff illegally open securities accounts; there is no record of employee mobile number reporting upon hiring; periodic checks on employees’ illegal account openings and part-time work are not conducted; some marketing staff lack securities licensing or even investment advisory qualifications and engage in illegal stock recommendations.

7. Business Premises Management Issues

The inspections revealed that some institutions have discrepancies between their registered address on business licenses or operating permits and their actual business locations.

The association will continue to strengthen industry self-discipline supervision, cooperate with regulatory authorities to promote healthy industry development, and jointly create a fair, just, transparent, and standardized securities market environment in Shanghai.