Observer Editorial | Building a New Order for Personal Loan Finance Through "Sunlight Transparency"

How Will Competition in the Lending Industry Shift Under the Transparency Rules for AI-Assisted Lending?

Reporter Liu Peng

On March 15, the National Financial Regulatory Administration and the People’s Bank of China jointly issued the “Regulations on Clear Disclosure of Personal Loan Business and Comprehensive Financing Costs,” requiring lenders to present borrowers with a clear comprehensive financing cost statement that transparently discloses the interest and fee costs of personal loans. This aims to effectively implement the disclosure requirements for personal loan interest and fee information.

The new regulation is guided by the principles of “sunshine, transparency, and standardization.” Its significance lies not only in strengthening the foundation for protecting financial consumers’ rights but also in regulating market order and fundamentally promoting healthy industry development.

In recent years, internet-based lending assistance has developed rapidly, significantly improving access to personal loans. With the help of traffic platform advertising and traffic diversion, borrowing money has become almost effortless. However, the flip side is rampant chaos: disguised “cutting head interest,” various fees with numerous names (such as information review fees, credit enhancement service fees, technical service fees), and vague overdue penalty rules have long been criticized. These opaque interest and fee structures cast a heavy fog over the relationship between borrowers and lenders, infringing on consumers’ right to information and easily leading to financial consumer disputes, thereby eroding trust in the financial system.

For financial consumers, the new regulation safeguards their right to know and choose. It clearly states that all costs related to personal loans—including interest, installment fees, credit enhancement service fees, and other financing costs, as well as overdue penalty interest—must be included in the “comprehensive financing cost” disclosure. Additionally, for both offline and online scenarios, the regulation requires that borrowers sign or confirm the comprehensive financing cost statement through a pop-up window, with a mandatory reading period, before signing the loan agreement or proceeding with installment payments. This ensures mandatory information disclosure and delivery, making any attempt by lending platforms to obscure true costs through complex structures ineffective.

Borrowers will be able to fully understand the total financing costs before signing, enabling them to make decisions aligned with their true intentions and financial capacity, thereby reducing induced borrowing and subsequent disputes caused by information asymmetry. Furthermore, the regulation sets a red line: aside from the explicitly disclosed costs, lenders and their partner institutions are no longer allowed to charge any other interest or fees related to the loan. Currently, regulators require that the total comprehensive financing cost of internet-assisted lending not exceed 24%. Looking ahead, there is potential for this rate cap to be further lowered, which is a natural trend toward reducing overall social financing costs. This effectively provides consumers with a “black-and-white” contractual basis, giving them more confidence to resist any extraneous fee demands during disputes.

From a broader perspective, the new regulation represents a systemic reshaping of the assisted lending and consumer finance markets, aiming to shift the industry from past “barbaric growth” to “regulated competition.” When all institutions compete within a unified, transparent rule framework, the core of competition will shift from crude “traffic monetization” and reliance on information asymmetry-based “fancy packaging” to genuine capabilities such as funding costs, risk pricing, and customer management.

At the same time, the regulation enhances lenders’ management responsibilities over partner institutions, establishing a governance framework of “shared risk and joint responsibility.” This helps address past issues where fee disclosures were fragmented and non-compliant operations were difficult to hold accountable. It encourages financial institutions, as ultimate risk bearers, to proactively strengthen transparent management of marketing, customer acquisition, and fee collection processes, thereby reinforcing compliance and risk control in personal loan business.

The regulation will take effect from August 1, 2026, adopting a “phase-out” approach for old and new practices, reflecting a cautious and pragmatic regulatory attitude and allowing the market an adaptation period. Full transparency of personal loan interest and fee information is a key measure for building a healthy financial ecosystem. When consumers can borrow with clarity and institutions can charge fees properly, a new order based on clear rules and standardized operations will accelerate formation. This is the foundation for the sustainable development of the assisted lending industry.