The regulation titled Personal Loan Business Comprehensive Financing Cost Disclosure Rules (hereafter referred to as the "Rules") will be implemented starting August 1, covering commercial banks, trusts, consumer finance companies, and small loan companies. Among the provisions, the most debated topic among industry insiders in recent days is the rumored requirement for an online "pop-up window of the Comprehensive Financing Cost Disclosure Form" with a mandatory 10-second reading time.

Whether this specific requirement will be enforced remains uncertain. Industry insiders indicate that some cooperating loan facilitation platforms have already launched the Comprehensive Financing Cost Disclosure Form between July 29 and 31, but without setting a mandatory reading time. They note that implementing a full 10-second reading period is challenging, and platforms are considering requesting a reduction in the mandatory reading time or reluctantly resorting to accelerating the timer to meet the requirement. If the mandatory 10-second reading rule is enforced, it is expected to significantly impact customer acquisition.

Sources from the consumer finance sector reveal that leading platforms are currently cautious in acquiring new customers, although some individual platforms are still ramping up efforts. In fact, as smaller and mid-tier platforms reduce their advertising spend, certain major platforms are increasing new customer acquisition, aiming to aggressively market before the September 30 deadline and seize the market share vacated by mid-tier platforms. Following the implementation of the new interest rate disclosure rules, financial institutions estimate a 10% to 30% decline in customer conversion rates, while advertising and traffic costs remain unchanged or even increase. For example, previously, out of 10 leads, 7 would convert; now, only 3 to 4 out of 10 leads might convert, despite the same or significantly higher marketing investment.

Detailed Rules for Online and Offline Channels

Reviewing the regulations, the Rules are quite detailed. Starting August 1, all new personal loan businesses must strictly comply, including the following three scenarios: (1) For in-person personal loan transactions, borrowers must sign the Comprehensive Financing Cost Disclosure Form before signing the loan contract or processing installments. (2) For online personal loan transactions, the Comprehensive Financing Cost Disclosure Form must be displayed via a pop-up window with a mandatory reading time, and borrowers must confirm before signing the loan contract or processing installments. (3) For installment payment services in online consumption scenarios, the loan principal, installment terms, service fees and their recipients, annualized comprehensive financing cost under normal performance, and contingent cost items and rates under default scenarios must be clearly and prominently displayed on the payment page. Additionally, it must be explicitly stated that no other fees beyond those disclosed will be charged.

The Comprehensive Financing Cost Disclosure Form must include the loan principal amount and itemize all fees and charges from the lender and its partner institutions, including their collection methods, rates, and recipients. Based on this, the annualized comprehensive financing cost (calculated using the IRR method) under normal performance must be computed. The form must also itemize contingent cost items, their rates, and recipients under default scenarios such as late payments or misuse. The disclosure form primarily covers two parts: the annualized comprehensive financing cost under normal performance and the contingent costs under default scenarios.

This regulation will further standardize personal loan businesses. For loan facilitation institutions, the major impact is that they can no longer charge additional fees; after full disclosure, any extra fees will likely lead to customer complaints. For banks and consumer finance companies, their primary responsibility is as managers, required to oversee all upfront fee collection. The overall impact is limited, as funding sources typically only charge interest and penalties, with no need to collect other fees.

Mandatory Reading of the Disclosure Form

Currently, offline transactions and installment scenarios are relatively manageable. The most challenging issue is online personal loan transactions. For online transactions, borrowers must be presented with a standalone pop-up window displaying the standard Comprehensive Financing Cost Disclosure Form with a mandatory reading time. The mandatory reading time should be sufficient for borrowers to fully understand the comprehensive financing cost, with rumors suggesting it should generally not be less than 10 seconds.

The Comprehensive Financing Cost Disclosure Form must disclose costs under normal performance, such as loan interest, installment fees, and credit enhancement service fees, as well as contingent costs under default scenarios like late payment penalties. However, it is unclear whether fees such as membership fees, equity fees, risk report fees, and debt management fees must also be included. This area is not explicitly defined, and there have been inconsistent calculations of fees for various equity products in the industry. The main criterion is that any fees "related to loan approval, disbursement, and collection" should be counted as part of the "personal loan comprehensive financing cost."

Some loan facilitation platforms may not disclose certain fee items in their products. The "manager" for such co-loan business has been clearly identified as licensed financial institutions. When funding institutions provide capital, as the "manager," they must manage the comprehensive financing cost of personal loans from partner platforms and disclose fees according to the funding institution's requirements.

Potential Customer Loss and Complaints

After full disclosure of all fee items on the Comprehensive Financing Cost Disclosure Form, it is expected that some customers' willingness to borrow will significantly decrease, especially for previously undisclosed items such as membership fees, equity fees, risk report fees, and debt management fees, which could affect borrowers' decisions. Additionally, if fee items are not listed on the Comprehensive Financing Cost Disclosure Form, subsequent customer complaints could implicate both the loan facilitation platform and the funding institution, potentially increasing complaints from certain channels.

Multiple institutions have stated they will optimize their complaint handling mechanisms. For example, they will establish dedicated complaint channels to promptly address customer inquiries and complaints about comprehensive financing costs, regularly analyze complaint data to improve information disclosure processes, and periodically audit partner platforms' disclosures. It is worth noting that the Disclosure Form does not include attorney fees or litigation costs, as such contingent costs arising from default scenarios for debt recovery are governed by relevant contract terms and do not need to be listed on the form.