The Legal Basis And Perfection Of Trust Investors Protection In China

Trust is an ancient and complicated form of finance.It has special institutional advantages and unique legal structure.The ownership,management and beneficial rights are separated.Under the increasingly serious environment of people’s livelihood and social problems,trust has gradually become a financial activity closely related to public life because of its flexible design and diversified social functions,thus making it stand with banks,securities and insurance.However,while the trust system is widely used in the commercial field and is improving the social financing institutions,there are also certain problems such as regulatory arbitrage,multiple nesting levels,and rigid redemption.The increasingly innovative financial products are becoming more and more complex,leading to financial consumers being in a weak position and the strengths and weaknesses has become more and more extensive.Therefore,the regulatory authorities have begun to rectify the phenomenon of asset management,set off a storm of strong supervision,protect financial consumers,correct the imbalance of financial forces and promote the stable and healthy development of financial markets.Although the theory is gray,the tree of practice is evergreen.Introducing the concept of financial consumer protection to protect trust investors,why do trust investors need to be protected? Why can’t it be included in the financial consumer protection system and need to be emphasized separately? For trust investors,what are the unique features of the concept of financial consumer protection? Why should we introduce this concept to enhance the trust investor protection system? This is the problem that this paper needs to solve.Financial consumers are the extension of consumers in the financial field.Referring to financial consumers,the relationship between consumption and investment will be inevitably explored.It has been a long time since the first mention of the concept of financial consumers.The academic discussion on its scope and concept has never been Stopping,but until now there has been a basic conclusion.The most scholars have reached a consensus that investment purposes do not affect financial consumers as part of the consumer.The financial sector includes banks,securities,insurance,trust,fund and so on.There are different targets in different fields.In the trust field,we can call them trust investors.The second problem is that whether financial consumers can completely cover the trust investors.Due to the special legal structure of the trust,there are three parties(in the commercial self-settled trust,the principal and the beneficiary are the same,so there are two parties),there is a threshold for the entry of qualified investors,the transfer of assets and the trustee’s further management and application,thus inevitably leading to a two-level investment relationship.One level is the investment behavior of the qualified investor(also called the settlor or beneficiary)who chooses the trust product and the other level is the investment activity during the management operation after the trustee receives the trust property.Then in the context of trust,both of these can be called trust investors.Should they be protected?Through searching and reading,most scholars do not agree to include professional institutional investors under financial consumers.Some scholars exclude qualified investors from the financial consumer field because of their professional knowledge and risk-taking ability.Therefore,we learn that in the field of trust,its investors do not seem to be fully covered by financial consumers.The concept of financial consumers is conducive to the protection of trust investors,and the trustee’s unique trust obligations in the trust field are the same regardless of the qualified investors or the professional institutions.The logic of this paper is to discuss the financial consumers and trust investors theoretically,discuss the legal connotation of financial consumers’ trust investors,and apply the legal relationship and content to these two based on the connotation comparison.What’s more,the comparative analysis is mainly based on policy guidance,legal regulations,and application of norms.Furthermore,the problem is raised.Under the premise that the concept of financial consumer protection is compatible with the protection of trust investors,the problem existing in the trust field is the ambiguity of the scope of the subject of the trust investor,the need to clarify the legal relationship and the need to differentiate the trust with other financial formats;in terms of regulatory environment,under the background of institutional supervision,for the products of asset management,different legal norms apply to the three stages of access,operation and exit for different vendors,which also lead to some challenge to the protection of the trust investors;in the market environment,that is,the existence of rigid redemption,rigid redemption once brought the prosperity of the trust.However,the existence of rigid redemption has caused the trust to deviate from the essence of “accepting the entrustment of others and managing the wealth”.Therefore,a large number of unqualified investors enter the trust legal relationship,and the invisible rigid redemption feature is not to clearly indicate "guarantee and protect interest rates".Once in the event of legal disputes,it is difficult for the judiciary to characterize the asset management products,and the regulatory agencies tend to puncture this layer of invisible protection and to break the psychological expectations of investors;in the judicial environment,when the court handles disputes between financial consumers and financial institutions,can the law directly apply to the Consumer Protection Law,and there is a dilemma for how punitive damages can be determined.There is no unified view in the theoretical community;these all pose challenges to protecting trust investors.Finally,the system can be perfected for the above problems.That is,first,under the concept of financial consumer protection,the financial consumers under the trust investment should be determined and we should make a legal fiction of the trust property,and the legal relationship of trust investment needs to be clarified;second,the system of qualified investors should be optimized and further we explore its setting standards,judicial application of financial normative documents,reaffirm the fiduciary duty of the trustee,and clarify the meaning of the fiduciary duty;third,in the context of large capital management,the concept of the trust market should be redefined,and the regulatory concept should be updated to a combination of institutional and functional supervision to regulate the classification of standardized products and non-standardized products.Finally,the system can be perfected for the above problems.First,under the concept of financial consumer protection,the financial consumers under the trust investment and the legal relationship of trust investment should be clarified,that is,trust investors include both financial consumers in the trust field and professional trustees.Both of them need protection,but there are differences in the legal basis,the intensity of the protection,and the legal measures of protection.The concept of the trust market should be redefined,and the regulatory concept should be updated to a combination of institutional and functional supervision;third,the qualified investor system should be optimized.Then,we should explore its setting standards,reaffirm the fiduciary duty of the trustee,and carry out the connotation of the fiduciary duty Explain;fourth,it is necessary to discuss the judicial application of financial normative documents,and analyze the subjective and objective requirements and burden of proof applicable to punitive damages,as well as the court’s determination of the basis for determining the amount of compensation,and discuss the need for the court to pay attention to the referee matter.