The guidelines also emphasize the importance of risk control. They require commercial banks have a good knowledge of their businesses, risks, clients and competitors.

In addition, the guidelines clarify commercial banks' obligations to consumers, such as correct disclosure of information, professional services, protection of assets, and offering effective complaint channels.

Despite this need for reform, Tang said, commercial banks in China have made progress in financial innovation.

The CBRC's statistics show the trading volume of major commercial banks reached 14 trillion yuan (US$1.77 trillion) last year.

Nearly 30 Chinese banks offer renminbi wealth management services, with a total value of 130 billion yuan (US$16.46 billion).

A total of 17 foreign and Chinese banks have been approved to invest clients' assets overseas under the qualified domestic institutional investor (QDII) programme. So far, they have launched nine QDII products, with sales of 2.3 billion yuan (US$291 million) in renminbi and US$87 million in US dollars.

But more financial innovations need to be made, Tang said.

In addition to financial reform, commercial banks are being asked to engage in public education, informing investors that they should be responsible for their own purchasing decisions.

At yesterday's press conference Tang also said the Bank of Communications and China Construction Bank have applied to establish insurance companies.

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