Investors' Financial Mistakes in Purchases: Financial Institutions Bear Responsibility

Ask AI · How can elderly investors effectively prevent financial risks?

This newspaper report (China Youth Daily · China Youth Network Reporter Liu Yinheng, Intern Reporter Zou Junqi) discusses what to do if, when purchasing financial products, you are recommended products that clearly do not match your risk tolerance. How should responsibility be determined if there are losses in financial management? The Beijing Financial Court recently announced several typical cases related to this, providing clear guidance for investors to protect their rights according to law.

Starting from February 1 this year, the “Measures for the Management of Suitability of Financial Institution Products” (hereinafter referred to as the “Measures”) officially came into effect. The aim is to reinforce the core obligation of financial institutions to “sell suitable products to suitable investors” and to clarify the suitability requirements that must be followed during sales. Specifically, the “suitability obligation” requires financial institutions to understand their clients, understand the products, and ensure proper matching when recommending and selling financial products.

In one case announced by the Beijing Financial Court, retired worker Li intended to manage his finances prudently but, under the guidance of a bank customer manager, repeatedly completed risk assessments via mobile banking and purchased a trust product that exceeded his risk capacity. Two years later, he suffered a loss of over 50,000 yuan.

The court found that although the bank had provided detailed product information and the online purchase process complied with relevant standards, Li’s risk assessment results were inconsistent twice, with significant differences in his answers to the same questions. The bank failed to verify this further or issue a specific written warning that the product’s risk exceeded the client’s capacity, thus failing to fulfill its suitability obligation. The court held the bank partially liable for compensation.

In another case, 65-year-old Shang, upon recommendation from a client manager, converted an existing fund that had already incurred losses into a so-called “high-potential” new fund. However, Shang was unaware that the risk level of the new fund had increased and exceeded his latest risk rating. When redeeming, he suffered a loss of over 700,000 yuan.

The court held that fund conversion is not merely a post-sale service. Sellers must still fulfill obligations such as risk disclosure and investor confirmation. The bank involved in the case failed to properly perform its suitability obligations during the fund conversion process. Ultimately, the court ordered the bank to bear 70% of Shang’s losses caused by the fund conversion.

The “Measures” stipulate that financial institutions must exercise special caution when selling or trading high-risk products to clients aged 65 and above.

Judges remind that the general investing public, especially elderly groups, must genuinely enhance their awareness of risk prevention, make cautious decisions based on their own risk tolerance, and adhere to the principles of “not investing if you don’t understand” and “not making blind decisions” to effectively safeguard their financial “purses.”

In one case, Cai, with extensive securities trading experience, was introduced by a friend to remit over 7 million yuan to a trust company to subscribe to trust products, but only recovered about 3.8 million yuan after liquidation. During this process, Cai did not sign a written contract, nor did he sign the relevant risk questionnaire himself. After the dispute arose, the trust company argued mainly that Cai’s “rich experience and strong risk awareness” justified their actions.

The court found that the trust company failed to provide evidence proving it had fulfilled its obligations of client qualification review and risk disclosure. Even if Cai had extensive investment experience, the amount invested in this trust was far higher than his previous single securities transactions, so the trust company’s responsibility for suitability review could not be exempted. The court ordered the trust company to pay Cai over 3.9 million yuan in investment losses.

The judge stated that the “Measures” require financial institutions to act lawfully, diligently, and prudently, bearing the primary responsibility for suitability management of the products they sell or trade. Suitable products should be sold or provided through appropriate channels to appropriate clients. For investors, regardless of whether they have extensive past investment experience, rational investing and safeguarding their property are essential.

Source: China Youth Daily Client