Shanghai's banking regulator, responding to rising problems related to a surge in the number of credit cards, says lenders will no longer be allowed to outsource the business of signing up new cardholders.

The Shanghai bureau of the China Banking Regulatory Commission also warned banks against incentives that reward salespeople only on the basis of how many new cardholders they bring in. "Complaints related to credit cards are on the rise this year amid the rampant issuing of cards," the local regulator said. "We found that the credit-card business at many banks is poorly regulated, and we are requiring banks to tighten their monitoring and management of these cards."

Complaints related to credit cards are the most prevalent public gripe about banking services.

In many instances, salespeople employed by subcontractors have signed up people who aren't creditworthy and can't make monthly payments. That enraged many parents in the city, who were shocked to be presented with bills for cards issued to their sons and daughters.

In other cases, people who sign up for credit cards to get introductory gifts and free bonus points but don't activate the cards then find they are being charged an annual fee. The regulator said banks can't now seek fees for unactivated cards.

There is also the problem of people getting multiple cards from different banks. The regulator said banks will be required to carefully vet credit limits for people with three or more cards.

Credit card complaints accounted for a quarter of all complaints to the regulator in the first eight months of this year, a rise of 3.47 percentage points from a year earlier.

About 5,661 cases involving credit card disputes were taken to the courts in the first six months of this year, compared with 6,295 complaints for the whole of 2008.