China is restricting financial regulators from taking jobs at banks and financial institutions after leaving their posts, the Business Vancouver reported.
According to China Banking Regulatory Commission (CBRC), officials working in regulatory positions are banned from taking jobs at financial firms within three years after they resign from their posts.
The report said that the move came as Chinese regulators tightened the regulation following several scandals that rocked the Chinese financial market.
Although the rule is not new, regulators said it was done to "stress and specify" to officials that they cannot take advantage of their positions.
A source said that the commission is contemplating on whether to announce the regulation or simply make it an internal code of practice within the agency.
But despite having rules that restrict senior officials from taking banking jobs or working for financial firms, enforcing the rule has become difficult because of loopholes, the report said.
"For example, a senior CSRC official could find a job in a state-owned fund house because that can be considered as an 'internal job transfer' rather than job hopping, and is thus exempt from the restriction," the source was quoted as saying.
Similar to situations in the U.S., Chinese financial professionals often leave their jobs to work in the private sector, where they receive better salaries.
In 2015, Yang Xiaojun, a former senior CBRC official, moved to Lufax, the country's biggest peer-to-peer lending platform, while Ye Lingfeng, also a former regulator, joined Huaxin Trust in 2016.
More recently, several top regulators became involved in corruption scandals. Xiang Junbo, the former chairman of the China Insurance Regulatory Commission (CIRC), was fired on Monday, April 24, for "serious violation" of Party discipline. Yang Jiacai, the assistant chairman of the CBRC (including family) was under investigation for unexplained money in their accounts.
Last Friday, April 21, Feng Xiaoshu, a former regulator working for the China Securities Regulatory Commission (CSRC), was banned for life from working in the sector. He was also fined almost half a billion yuan for trading stocks under the names of his relatives and for earning from it using inside information.