Invested 500,000 in Wealth Management and Lost 50,000! Due to One Operation, Bank Ordered to Compensate Part of the Loss

To encourage people to invest their year-end bonuses, holiday allowances, and other short-term idle funds, many banks have launched various special financial products. When investors choose these products, issues such as information asymmetry, unstandardized sales practices, and inadequate risk warnings can easily lead to legal disputes and litigation. Recently, the “Measures for the Management of Suitability of Financial Institution Products” officially came into effect, comprehensively regulating the sales behavior of financial products, strengthening the obligation of financial institutions to ensure suitability and risk control, and protecting investors’ legal rights.

The so-called “obligation of suitability” simply means that financial institutions must understand their clients and their products, and recommend appropriate products to suitable investors when promoting and selling financial products. So, when a financial institution fails to fulfill or inadequately fulfills its suitability obligation, how can investors protect their legal rights and prevent financial losses?

Li, a retiree, had a deposit maturing at a certain bank. Customer manager Zhang recommended the A trust plan (a stable product with a risk rating of R3, requiring investors to have over two years of investment experience and a household financial net worth of more than 3 million yuan). Li completed a risk assessment at the bank counter, which showed he was a conservative investor and did not meet the purchase criteria.

The next day, Li returned to the bank. Under Zhang’s guidance, he downloaded the bank’s mobile banking app and completed a second online risk assessment. Because he listed his household net worth as 1 million yuan, he still could not purchase the trust plan. Half a month later, Li, again guided by Zhang, updated his household net worth to over 3 million yuan via the app and signed a qualified investor declaration. On the same day, he purchased 500,000 yuan of the trust plan.

Two years later, upon redemption, Li lost more than 50,000 yuan of principal. Li believed that Zhang did not inform him that the product was a trust product with potential losses when recommending it. Since his savings were limited and he had been purchasing principal-protected financial products, and because he was elderly and unable to operate the app himself, all transactions were handled by Zhang. Additionally, the two risk assessments produced inconsistent results, which did not meet the qualified investor criteria for the product. Therefore, he sued the bank, demanding compensation for his investment losses. The court ruled that the bank should bear responsibility for 30% of Li’s principal loss.

Article 13 of the “Measures for the Management of Suitability of Financial Institution Products” clearly prohibits five types of violations during promotion, sales, or trading: replacing client evaluation, improper prompts, conducting assessments after sales or trades, or influencing assessment results through other means; providing false, misleading, or significantly omitted information during client notification and risk warnings—including but not limited to confusing deposit, financial management, fund, trust, insurance products, promising principal protection or guaranteed returns, or exaggerating product yields or guarantees; actively promoting products with higher risk levels than the client can bear, deceiving or misleading clients into purchasing unsuitable products; manipulating performance or using improper displays to mislead or induce clients; and other behaviors that violate suitability requirements and harm clients’ legitimate rights.

In this case, the court believed that whether the bank fulfilled its suitability obligation should be assessed from two aspects:

First, mobile banking is an online sales channel, and its risk warning obligations are mainly fulfilled through this platform. Li used the app to purchase the product, following step-by-step prompts and confirmations. Evidence shows the bank provided detailed product information, and the online purchase process complied with relevant standards. The trust documents clearly emphasized the risks, including that the product “does not promise principal protection or minimum returns.” When Li logged in with his real-name registered phone number, entered his password, completed verification, and clicked confirm, it was considered as his own operation.

Second, regarding Li’s risk assessment, the two results were inconsistent, especially given the significant differences in responses to the same questions. The bank should have further verified and conducted a suitability review.

The court held that, based on the first risk assessment, Li was not a qualified investor for the product. When the bank recommended the product, it should have issued a written warning about the higher risk compared to Li’s risk tolerance. Therefore, the court found that the bank failed to fulfill its suitability obligation.

Beijing Financial Court judges remind investors: before purchasing financial products, they must truthfully and completely fill out risk assessment questionnaires, objectively evaluate their risk capacity, avoid concealment or exaggeration, and ensure the results accurately reflect their financial situation and risk tolerance. During the investment process, keep passwords and verification information secure, carefully review and confirm the content of signed documents, and avoid easily disclosing information or delegating operations to others. As the primary responsible person for their assets, investors who fail to conduct honest assessments, leak account information, delegate operations, or neglect to read documents carefully will bear the legal and financial consequences of their losses.

Image source: Visual China

Source: Beijing Daily Client