Some regional regulators are again calling for local consumer finance companies to reduce the proportion of guarantee and credit enhancement business. Some companies plan to clear this business within the year.

Reporters learned from multiple credible sources in the consumer finance industry that some regional regulators have recently reiterated their plans to reduce the share of guarantee-enhancement and credit-support business, guiding industry entities within their jurisdiction to orderly cut back the outstanding balance of this business. Notably, this regulatory intent had already been received and implemented by the industry earlier. The Measures for the Administration of Consumer Finance Companies, which officially took effect on April 18, 2024, was the first to clearly stipulate that the outstanding balance of guarantee-enhanced loans at consumer finance companies in their locality must not exceed 50% of the total outstanding loan balance. By the following year—i.e., October 2025—regulators in multiple places stepped up efforts in actual business operations. Through different forms such as window guidance, they lowered the upper limit to 25% and also set a remediation transition period for institutions. It should be pointed out that although regulators in multiple locations have conveyed this regulatory intent to the industry (that the proportion of guarantee-enhancement business should not exceed 25%), this is not a rigid requirement. Enforcement strictness varies from region to region; in some places, it is only offered as guidance. An executive at a large-to-medium-sized consumer finance company in East China told reporters that because its existing outstanding balance of guarantee-enhanced loans is “not large,” the company has actively responded to regulatory guidance and has continued to reduce the outstanding balance of this business. The company plans to clear the outstanding balance of this business entirely within this year. (