Ant Fortune’s new investment advisory service has been taken down less than ten days after its launch due to compliance issues, according to a local media report.
The series of financial products, named “Golden Choice Investment Consultants,” was launched by Ant Group in partnership with six financial institutions—Aegon-Industrial Fund, Southern Asset Management, Zhong Ou Asset Management, GF Fund Management, Harvest Wealth, and Caitong Securities. It was available to Alipay’s 1 billion users.
The six securities firms’ fund managers designed more than ten investment portfolios based on mutual funds that were selected by Alipay, each promising at least 13% annualized returns, Chinese business newspaper 21st Century Business Herald reported.
The service was taken down this week as Ant Group does not hold a fund rating license, which is required by law for an entity to assess and publicly share information about the investability of financial instruments, according to 21st Century Business Herald.
Alipay maintains a set of “golden funds” that it endorses as prime investment choices that will yield good returns for its users. These “golden funds” were the building blocks of the offerings of the Golden Choice Investment Consultants. Industry insiders speculate that these products were taken offline because they do not meet regulatory requirements, given Ant Group’s lack of a fund rating license.
“The financial institutions should have established their own fund library, and implemented due diligence, but Alipay took care of this. Alipay is not qualified to rate or assess funds. Its assessment of the ‘golden funds’ pool may have compliance complications,” a mutual fund expert told 21st Century Business Herald.
Fund advisory is a relatively new form of financial service in China. The country’s top securities regulator, the China Securities Regulatory Commission (CSRC), launched a pilot in October 2019 to test out advisory services for mutual fund investment opportunities.
Information from the Asset Management Association of China shows that there are currently seven licensed fund rating agencies in China. Additionally, three media companies also hold the same license. Ant and its partner companies are not on the list, which means they are barred from issuing investment endorsements or fund ratings to consumers even though they can design financial instruments.
The takedown of Ant Fortune’s investment service is the latest development in a series of significant changes that have altered Alipay’s operational scope. In September 2021, Huabei and Jiebei, Ant’s highly profitable consumer lending businesses, were removed from Alipay.
China’s central bank, the People’s Bank of China, then asked Ant to turn over its trove of user data to a state-backed credit-scoring venture. In November 2021, Alipay added privacy features after the regulator said the app “collects personal information excessively.”
The company was also told by the government to “rectify” its insurance and financial management businesses to comply with regulations. Xiang Hu Bao, the only major platform left in China’s mutual aid market after its competitors were suspended by regulators, will shut down by the end of January.