When a social institution or individual previously had issues with their credit record, they could face restrictions on obtaining loans or travel. Now, as the social credit system continues to be refined, financial institutions and their employees also face strict criteria for their creditworthiness. Financial regulators have now established rules for "serious dishonesty," where 11 specific behaviors falling under three categories will result in being placed on a blacklist.
On July 10th, the National Financial Regulatory Administration released the "Provisions on the Management of the List of Seriously Dishonest Subjects (For Trial Implementation)." The provisions carefully define the scope for inclusion on the list. Financial institutions and their employees who are subject to administrative penalties or other measures by the National Financial Regulatory Administration or its local offices, and whose violations are deemed particularly egregious and severe in nature, will be included in the list of seriously dishonest subjects. The trial provisions are set to take effect on October 1, 2026.
Three Categories and Eleven Behaviors Leading to Blacklisting
Once dishonesty occurs in the financial sector, it can potentially lead to massive financial losses for millions of individuals and severely impact financial stability. For this very reason, strengthening the management of seriously dishonest entities not only helps effectively prevent financial risks but also enhances governance efficiency and maintains good order in financial markets.
The newly released provisions explicitly state that citizens, legal persons, or other organizations that violate laws and regulations and are subject to administrative penalties or other measures by the National Financial Regulatory Administration or its local offices, and whose illegal or non-compliant acts are particularly egregious and severe, shall be included in the list of seriously dishonest subjects. Their information will be recorded, shared, and publicly disclosed, with corresponding management measures and credit restoration mechanisms applied.
Specifically, this includes three categories of circumstances:
The first category involves subjects who violate laws and regulations and receive one of three types of administrative penalties from the National Financial Regulatory Administration or its local offices. This includes situations such as "a legal person entity having its business or operational license revoked, having lifetime professional qualifications cancelled or revoked, being banned for life from working in the banking industry, or being banned for life from entering the insurance industry."
The second category involves subjects who, while not receiving the administrative penalties listed in the preceding article, commit any of the following acts and receive heavier administrative penalties from the National Financial Regulatory Administration or its local offices, or face regulatory enforcement measures such as restrictions on market access or orders to transfer equity, thereby seriously disrupting fair market competition order and normal social order. These subjects shall be included in the list of seriously dishonest subjects according to these provisions.
Examples include obtaining administrative permits through deceptive or bribery methods; forging, altering, or transferring financial institution business or operational licenses; using fraudulent means to obtain loans; shareholders or actual controllers of financial institutions abusing shareholder rights or failing to fulfill shareholder obligations, causing serious harm to the interests of the financial institution, its clients, or other shareholders; financial institutions, their employees, shareholders, or actual controllers organizing or participating in illegal fundraising or other illegal financial activities; establishing financial institutions or engaging in financial business without approval from financial regulatory authorities; and other circumstances stipulated by laws and administrative regulations.
The third category involves subjects who, after an administrative penalty or other administrative decision is made by the National Financial Regulatory Administration or its local offices, have the ability to fulfill the decision but refuse to do so or evade execution, thereby seriously undermining the credibility of the financial regulatory department, and who are subsequently subject to a compulsory enforcement ruling by a people's court.
Of course, before making a decision to include an entity on the seriously dishonest subjects list, the National Financial Regulatory Administration or its local offices must inform the subject of the reasons and basis for the decision, as well as the rights the subject enjoys according to law. If the subject submits a statement or defense, the authorities must verify it and provide feedback within the stipulated time limit.
Costs of Serious Dishonesty Further Increased
In the context of the increasingly mature modern social credit system, credit is akin to an individual's second "identity card," and its importance is self-evident. Once identified as a dishonest person, one will face severe consequences in many aspects of life.
With the issuance of these provisions, the scope of serious dishonest behavior has been defined. For the financial industry, this serves as both a warning and a regulatory "high-voltage line" established by the authorities. Particularly regarding illegal or non-compliant activities, the implementation of these provisions is expected to have a deterrent effect on such misconduct within the financial sector and further increase the cost of violations for financial institutions.
Looking at the insurance industry alone, illegal or non-compliant activities are not uncommon. Moreover, as regulatory scrutiny tightens, penalties are becoming heavier. In the first half of 2026, the insurance industry received approximately 910 penalty notices, with total fines amounting to about 1.6 billion yuan. Among these, property insurance companies remained the primary target for penalties.
It is worth noting that industry bans, which were once rarely seen, have become particularly frequent in the past year or two. In the first half of 2026, the financial regulatory system issued industry bans against 40 insurance practitioners, with 10 of them facing lifetime bans.
The reasons for lifetime bans primarily involve responsibility for inadequate internal control management, direct responsibility for insufficient management of employee conduct, deceiving policyholders, fabricating intermediary business to obtain commissions, and criminal acts committed during employment. This indicates that regulators are gradually intensifying their crackdown on frequently occurring violations. Furthermore, industry bans are no longer limited to senior executives or major decision-makers but have extended to ordinary management positions and even back-office staff. For example, a back-office employee at a branch of an insurance company received a 3-year ban for fabricating intermediary business to obtain fees, while a deputy general manager received a 15-year ban for falsifying financial data.
Such intensity and measures are the most direct manifestation of financial regulation "having teeth." Now, with the provisions defining the list of seriously dishonest subjects, the cost of making mistakes in the insurance industry will be further elevated.
Combining Punishment with Education: Removal from List and Lifting of Measures Possible After 3 Years
The social credit system is a foundational institution for the socialist market economy. Its core lies in reducing transaction costs, preventing financial risks, and enhancing governance efficiency through mechanisms that incentivize trustworthiness and penalize dishonesty.
To promote the comprehensive integration of social credit system construction into the rule of law, standardize and improve credit measures across all fields and processes, regulate the management of the list of seriously dishonest subjects in the financial sector, strengthen credit supervision, continuously improve mechanisms for preventing and resolving financial risks, and maintain good order in financial markets, the issuance of these provisions not only responds to the State Council's call to vigorously promote the construction of the social credit system but also serves as an important supplement to establishing a closed-loop governance system for dishonest behavior in the financial field.
It is important to note that, based on past practices in the financial sector where emphasis was placed on inclusion in dishonesty lists with little attention to exit mechanisms, once listed as dishonest, whether individuals or organizations, they would face long-term restrictions with no clear exit channel. This could easily lead to a situation of "once dishonest, restricted for life," which is not conducive to business entities correcting their mistakes and rectifying their conduct, nor is it beneficial for stabilizing market operating expectations.
Judging from these new provisions, in addition to defining the scope for the seriously dishonest subjects list, the provisions also specifically clarify the conditions and procedures for credit restoration, encouraging listed subjects to correct their dishonest behavior, eliminate adverse impacts, and apply for credit repair.
For instance, if a subject has been listed for three full years from the date of inclusion, the authority that made the inclusion decision must remove them from the list within ten working days after the three-year period expires and lift the management measures stipulated in Article 14 of these provisions. If the administrative penalty or other administrative decision upon which the inclusion was based is subsequently revoked or confirmed invalid, the authority that made the inclusion decision must revoke the inclusion decision, remove the subject from the list, and lift the management measures stipulated in Article 14 within ten working days.
Additionally, if a subject has been listed for one full year and simultaneously meets three conditions—"having voluntarily fulfilled the obligations stipulated in the administrative penalty or other administrative decision that formed the basis for inclusion," "having proactively eliminated harmful consequences or adverse impacts," and "not having reappeared in circumstances warranting inclusion under these provisions"—they may apply to the authority that made the inclusion decision for early removal.
However, if it is discovered that an applicant for early removal intentionally concealed the true situation or provided false information, and the circumstances are serious, the decision for early removal will be revoked. The subject will be restored to the listed status, and the period required for removal will restart.
This setup not only clarifies the path for credit restoration but also strictly manages the repair process. Most importantly, it maintains the punitive force against particularly egregious serious dishonesty that causes significant financial losses, effectively achieving a combination of punishment and education.
According to the regulatory timeline, these provisions will come into effect on October 1, 2026. This signifies that the financial industry is about to formally enter an era where serious dishonesty will face significant penalties.