Inclusive finance policies are aimed at providing financial support to the most vulnerable and marginalized groups to help them gain new opportunities and get back on their feet, thereby creating a virtuous cycle between financial inclusion and economic growth. A variety of government-sponsored microloan products are available for low-income individuals and those with unfavorable credit records. In addition, debt adjustment programs are available for delinquent debtors, offering an extended payment period, amortization, interest rate reduction and debt reduction. Consumer protection is a key area of inclusive finance policies. In this regard, the new legislation on financial consumer protection passed at the National Assembly in March 2020 aims to protect consumers from misselling and other unfair sales practices of financial companies while strengthening consumer rights and empowering consumers to make informed decisions about their investment and asset management.
Nov 26, 2020
- Deferment of Principal Payment for Vulnerable Debtors to be Available for Six More Months
- The FSC and other relevant institutions decided to make available the deferment of principal payment programs for vulnerable debtors for six more months until the end of June 2021 due to concerns about a protracted pandemic situation. (PRE-WORKOUT BY LENDING INSTITUTIONS) Credit loan and microloan users experiencing a diminished debt servicing capacity due to a drop in income amid COVID-19 may apply for a pre-workout program (deferment of principal payment) for six to twelve months at the originating lending institution until June 30, 2021.(DEBT ADJUSTMENT BY CCRS) The current deferment of principal payment (one-year maximum) offered by the Credit Counseling Recovery Service for those who have seen their income drop due to COVID-19 will be made available on a more regular basis from December 1, 2020. (INDIVIDUAL DEBT PURCHASE BY KAMCO) The Korea Asset Management Corporation (KAMCO)’s debt purchase program will help purchase unsecured debt accrued between February 1, 2020 and June 30, 2021. Both lending institutions and debtors may apply during this period.* Please refer to the attached PDF for details.
Oct 27, 2020
- FSC Introduces New Rules on Financial Consumer Protection
- The FSC introduced a proposal of an enforcement decree to provide details of the newly enacted legislation on financial consumer protection (“the Act” hereinafter), which is scheduled to go into effect on March 25, 2021.1 The proposal will be available for public notice and comment for forty days from October 28 until December 6.KEY MEASURES(SCOPE OF APPLICATION) The Act stipulates that financial products offered by banks, insurance companies, financial investment firms, specialized credit finance companies and savings banks will become subject to the new law. The proposal includes financial products offered by the Credit Union, P2P lending firms and registered private lenders.(ENTRY REQUIREMENT) The proposal establishes business registration requirements for both loan sales agents and independent advisory service providers. For both categories, online service providers are required to install an algorithmic program designed to prevent conflicts of interest for consumers.(INTERNAL CONTROL REQUIREMENT) In principle, all financial service providers are required to have internal control standards on financial consumer protection with the exception of small firms with less than five regular employees. Financial service providers should regularly improve their internal control standards if and when indicated by the regulators. The internal control standards should include the current best practice guidelines on financial consumer protection.2(SALES REGULATIONS) This proposal specifies rules improvements and introduces additional regulations that are necessary for the implementation of the six major sales regulatory principles under the Act.(CONSUMER RIGHTS) The Act introduces new safeguards by guaranteeing consumers the right to withdraw subscription and terminate unfair agreements, while delegating the scope of application through an enforcement decree. In this regard, the right to withdraw subscription applies to all loan and guarantee products in principle and the
Oct 19, 2020
- FSC Introduces Improvements to Credit Recovery Support Programs
- The FSC announced ways to improve the credit recovery support system on October 16. The improved measures are expected to go into effect in November this year.The FSC has been working to improve the personal debt adjustment program run by the Credit Counseling Recovery Service (CCRS) to help reduce excessive personal debt service burdens and support quick recovery. In this year, the government introduced loan deferment programs in March and April to help relieve debt burdens of vulnerable individuals hit by the COVID-19. In order to improve the credit recovery support system, the FSC prepared the following measures.a. CCRS’s up to one-year loan deferment program currently offered to those who have seen their income drop due to COVID-19 will be extended to include those who have been laid off and/or experienced business closure.b. The age limit for CCRS’s special debt adjustment program for the unemployed youth with overdue debts of three months or more will be increased from below 30 years old currently to 34 years old and below, while extending the deferment period from maximum four years to five years.c. Improvements will be introduced that will restrict creditor institutions from denying loan deferment on non-overdue loans or activate a trigger clause for events of default just because a debtor applies for a debt adjustment.d. Improvements will be made to allow creditor institutions to cancel account seizures upon debtors’ request when entering into a debt adjustment program.e. Special exemptions for vulnerable debtors will be applied to all basic income recipients and those with severe disabilities.f. The current six-month term restriction placed before a debtor can reapply for an individual workout will be shorten to three months to help with quick recovery.g. For the portion of the principal that has been repaid, the remission rate on interest will be increased from 80 percent to 90 percent to help reduce debt servicing burden of vulnerable debtors.h. Su
Oct 15, 2020
- Mobile Microloan Application to be Available for Young Adults
- The FSC announced the availability of mobile microloan application system for young adults starting from October 30. Both first-time and returning applicants will be able to use the mobile application system and submit applications online via a mobile app from the Korea Inclusive Finance Agency.The “sunshine loan for youth” program was launched in January this year to provide financing support to young adults who face difficulties in accessing traditional lending institutions. Since January, it has provided KRW135.2 billion in microloans to some 38,000 young adults.With the third supplementary budget, the fiscal resources allocated for the program has been expanded from KRW100 billion to KRW200 billion. In addition, special guarantees became available for the program from August 18, which raised the maximum lending cap per application from KRW3 million to KRW5 million.The “sunshine loan for youth” program with special guarantees will continue to be offered until the end of this year with the mobile application service being available from October 30.* Please refer to the attached PDF for details.
Sep 09, 2020
- FSC Discusses Details of Consumer Credit Bill
- The FSC held the 9th task force meeting on improving the personal debt management system on September 9, and unveiled key details of the Consumer Credit Bill, which include (i) promoting private sector driven debt adjustment process, (ii) mitigating excessive debt collection burdens and (iii) strengthening debtor protection measures. KEY PROVISIONSThe government’s proposal on Consumer Credit Bill will focus on establishing a delinquent debt management procedure and providing incentives to financial institutions to promote a virtuous cycle for both debtors and creditors.I. PROMOTE PRIVATE SECTOR DRIVEN DEBT ADJUSTMENT PROCESS► Provide delinquent debtors who face difficulties in repaying debts on their own the right to request debt adjustment from financial institutions► Require financial institutions to inform debtors of their right to request debt adjustment prior to taking steps toward debt collection while prohibiting financial institutions from pursuing debt collection upon such a request and having them offer a debt adjustment plan based on their own standards► Introduce debt adjustment mediation specializing businesses which will provide assistance to individual debtors during the debt adjustment processII. MITIGATE EXCESSIVE DEBT COLLECTION BURDENS► Prohibit overdue interest charge on the principal which has not yet reached maturity even in the events of default► Restrict interest hike on debts that are deemed uncollectable and transferred to a third party such as a debt collector and have creditor institutions to consider the possibility of debt recovery when drawing up and applying their own standards of extinctive prescription► Limit the number of debt collection calls while providing debtors with a right to request a restriction on debt collection calls and to file lawsuits for damageIII. STRENGTHEN DEBTOR PROTECTION MEASURES► Require original creditor institutions to evaluate how debt collection agencies treated debtors in the past and whe
Jun 25, 2020
- Personal Debt Purchase Program to Begin June 29
- Vice Chairman Sohn Byungdoo attended the launching of the Korea Asset Management Corporation’s personal debt purchase program on June 25 and spoke about the importance of inclusive finance.KAMCO, lending institutions and other relevant institutions signed a memorandum of agreement. Under the agreement, lending institutions may sell non-collateralized delinquent personal debt to KAMCO, which in turn will take over individual debt and help debtors with debt adjustment plans.KAMCO’s personal debt purchase program begins on June 29 for the initial duration of one year with the possibility of extending thereafter.The following is a summary of Vice Chairman Sohn’s remarks.With the government’s KRW175 trillion-plus financial support programs have helped to ease problems of market instability and liquidity shortage. However, widening income gap in the society needs to be closely watched. Job losses and business closures have created extra burdens for many individuals, while asset prices are also showing signs of instability in the property and stock markets. The delinquency rate in household debt has not increased, but the rising trend in household debt needs to be watched carefully.The agreement signed by KAMCO and financial institutions today is aimed at providing assistance to the most vulnerable debtors. The government introduced on April 29 a deferment of loan repayment program for individual debtors who are incapable of servicing debt due to the pandemic-related reasons. For delinquent debtors, KAMCO will take over individual debt from lending institutions and help with debt adjustment. To help establish a more appropriate relationship between lending institutions and debtors, the government will work on introducing a bill aimed at protecting debtors’ rights and preventing excessive debt collection methods.* Please refer to the attached PDF for details.
Apr 27, 2020
- Deferment of Principal Payment Available for Vulnerable Debtors
- The FSC announced on April 27 that deferment of principal payment will be available for vulnerable debtors who are unable to service debts due to diminished income caused by the COVID-19 pandemic. It will be offered by all financial institutions from April 29 until the end of this year.PROGRAMSBased on the situation of individual debtors, either a pre-workout program or a debt adjustment program is available.(PRE-WORKOUT BY FINANCIAL INSTITUTIONS) Microfinance loan users should apply for deferment of principal payment from the original lending institutions. Debtors without multiple debts are also able to apply at the lending institutions.Individual debtors whose diminished income minus living expenses is lower than monthly debt payment can apply for a deferment of principal payment for six to twelve months with no extra fees.(DEBT ADJUSTMENT BY CREDIT COUNSELING RECOVERY SERVICE) Debtors with multiple debts can apply for deferment of principal payment through a debt adjustment program at the Credit Counseling Recovery Service.Individual debtors with multiple debts whose net property value is less than the amoun ot total debts can apply for a deferment of principal payment for six to twelve months. Long-term debtors with three or more months of overdue payments may also be eligible for a debt relief program which offers 10~70 percent of debt cancellation.* Please refer to the attached PDF for details.
Apr 08, 2020
- Strengthening Support for Vulnerable Debtors
- The government unveiled its plans to strengthen support for vulnerable debtors at the 4th Crisis Management Meeting held on April 8. The government will help set up a KRW2 trillion new facility at the Korea Asset Management Corporation, which will be used to purchase overdue debts and help alleviate debt burdens of vulnerable debtors.BACKGROUNDThe prolonging economic slowdown caused by the COVID-19 has led to unpaid leaves and loss of work opportunities for many individuals, which may contribute to an increasing number of cases where individuals are unable to service their debts. Against this backdrop, the government introduced the plans to help prevent vulnerable debtors from turning into delinquent debtors by expanding the eligibility of pre-workout programs by individual financial institutions, strengthening the debt adjustment support provided at the Credit Counseling Recovery Service and establishing a new facility for purchasing overdue personal debts.KEY MEASURESI. PRE-WORKOUT PROGRAM FOR DEBTORS WITHOUT MULTIPLE DEBTSFrom the end of April, vulnerable debtors whose income levels have fallen due to COVID-19, that have difficulties servicing household debts and are facing a risk of debt overdue may use pre-workout programs offered by individual financial institutions. A 6- to 12-month deferment of principal payment will be provided by all financial institutions until the end of this year. The pre-workout programs may be extended thereafter if deemed necessary.II. DEBT ADJUSTMENT PROGRAM FOR DEBTORS WITH MULTIPLE DEBTSFrom the end of April, multiple-debt holders whose income levels have fallen due to COVID-19, that have difficulties servicing debts and are facing a risk of debt overdue may use debt adjustment programs offered by the Credit Counseling Recovery Service. The CCRS’ debt adjustment programs offer up to one year of deferment of principal payment for at-risk debtors (including short-term debtors of less than three months) as well as debt reduction fo
Mar 26, 2020
- Government Expands Young Adult Loan for Rent Payments to Boost Financial Inclusiveness
- The FSC announced on March 26 an increase of KRW3 trillion for the young adult loan for rent payments from the previously available amount of KRW1.1 trillion to KRW4.1 trillion.The young adult loan for rent payments was launched on May 27, 2019 through an agreement between the FSC, the Korea Housing Finance Corporation and the Korea Federation of Banks with an initial goal of providing KRW1.1 trillion in loans for young adults. During a 10-month period until March 20 this year, about 25,000 young adults have benefited from low-rate loans for rent payments with the total amount of loans issued standing at KRW1.2 trillion. About 25 percent of the young adults using the loan were found to be students or job seekers without regular incomes. The loan program has had an impact in resolving housing problems of many young adults.With the increased amount of loans available for up to KRW4.1 trillion, about 60,000 more young adults are expected to benefit from the program.The FSC will continue to work for expanding the online application channels in order to improve accessibility for young adults.* Please refer to the attached PDF for details.
Mar 11, 2020
- Loan Deferment Available for Financially Vulnerable Individuals
- The FSC announced on March 11, 2020 loan deferment programs for six months for the financially vulnerable individuals affected by the COVID-19 outbreak.The programs are intended to support debtors who either have entered into a debt adjustment agreement or are recipients of microfinance policy loans and have qualified for a diminished income level due to the COVID-19 outbreak.During the grace period, extra penalties such as a downgrade in credit rating will not be imposed for the failure to make debt payments.For small merchants in traditional markets, the government will make available KRW5 billion in additional funds (up to KRW10 million for each merchant) through a microfinance scheme.* Please refer to the attached PDF for details.
Dec 16, 2019
- FSC Unveils Revised Guidelines for Financial Consumer Protection
- The FSC unveiled a revision to the Guidelines on Financial Consumer Protection on December 16 in order to continue to encourage financial institutions to take more responsibility in consumer protection prior to the enactment of the Financial Consumer Protection Act by the National Assembly. The revised guidelines, which will go into effect on January 1, 2020, contain measures to enhance consumer protection function of financial institutions.KEY MEASURESI. ENCOURAGE CHIEF EXECUTIVES TO LEAD CONSUMER PROTECTION EFFORTS► Within financial companies, the position of chairperson of financial consumer protection council will be assumed by company’s chief executive officer (CEO) in order to boost the status of financial consumer protection council. The government will recognize an exemption to this rule and allow chief consumer officer (CCO) to assume the role of chairperson provided that the company has received an above ‘satisfactory’ rating on its consumer protection record.► In order to promote a comprehensive consumer issue management system in financial companies, the role and authority of financial consumer protection council will be boosted. When launching new products, the council has the authority to conduct impact analysis on consumers, review results of advertisement compliance assessment by relevant authorities and examine new or revised product information.► Financial institutions will be encouraged to hire a sufficient level of consumer protection specialists while coordinating with relevant departments, such as customer relations, product development and sales.II. GRANT MORE INDEPENDENCE AND AUTHORITY FOR CHIEF CONSUMER OFFICERS► Financial companies managing large amounts of assets and have a high frequency of consumer complaints reported within a particular region should appoint an independent chief consumer officer (CCO) among its board members.► CCOs should be given sufficient authority to oversee issues concerning consumer protection. By
Nov 28, 2019
- Revision Bill on Credit Information Act Moves Ahead at National Assembly
- The National Policy Committee of the National Assembly approved a revision bill on the Credit Information Use and Protection Act on November 28. Along with the Personal Information Protection Act and the Act on Promotion of Information and Communications Network Utilization and Information Protection, this revision bill on the Credit Information Act is considered as a key legislation to promote data economy.KEY FEATURES► ESTABLISHING NEW LEGAL BASIS FOR USING AND ANALYZING BIG DATA- Pseudonymised information may be used without consent from the owner of the information for statistical, industry research and public documentation purposes.- Converging data is permitted only by the institutions designated by the government.- Safety measures are established for the use and convergence of pseudonymised data, including a prohibition on re-identification of pseudonymised data and a requirement for separate management of additional information. ► STRENGTHENING THE ROLE OF PERSONAL INFORMATION PROTECTION COMMISSION- The revision bill on the Personal Information Protection Act upgrades the status of the Personal Information Protection Commission (PIPC) from an administrative commission to that of a central administrative agency with authority to conduct investigations, regulate commercial enterprises and implement relevant laws.► IMPROVING REGULATORY FRAMEWORK ON CREDIT BUREAU INDUSTRY- The credit bureau industry will be categorized into a) personal CB, b) individual business CB and c) corporate CB, while the entry barrier for credit bureau businesses will be lowered. - The current regulation which restricts credit bureau businesses from performing for-profit operations will be lifted, and credit bureau businesses will be allowed to conduct data analysis and processing as well as consulting.- Conduct regulations will be established to improve the soundness of the credit bureau industry. Largest shareholders of personal CB and individual business CB businesses will be su
Nov 27, 2019
- New Bill on Financial Consumer Protection Moves Ahead at National Assembly
- NEW BILL ON FINANCIAL CONSUMER PROTECTION MOVES AHEAD AT NATIONAL ASSEMBLYThe National Policy Committee of the National Assembly approved a Financial Consumer Protection Bill on November 25. As a key policy agenda of the Moon Jae-in administration, this legislation will help enhance the rights of financial consumers and improve the overall public trust in the financial industry.KEY FEATURESI. SIX SALES REGULATIONS TO BE APPLIED TO ALL FINANCIAL PRODUCTSThe six major sales regulations currently applied to selected financial products by separate laws, such as the Financial Investment Services and Capital Markets Act, will be applied to all financial products. II. STRICT PUNISHMENT FOR VIOLATIONS OF SIX SALES REGULATIONS The new legislation established a legal basis to impose punitive fines for violating the major sales regulations (except ‘the principle of suitability’ and ‘the principle of adequacy’ regulations); integrated divergent penalty criteria currently under different laws into a unitary penalty system; and established a legal basis to impose a penalty of up to KRW30 million for violating the ‘principle of suitability’ and the ‘principle of adequacy’ regulations.III. PREVENTION OF CONSUMER DAMAGES FROM MISSELLING EFFECTIVE REMEDIESA new set of consumer rights and arrangements will be introduced to prevent consumers from falling prey to misselling and other unfair sales practices and provide more effective remedies in the afterwards.- Consumers will be entitled to the right to withdraw subscription, to terminate contract if it is deemed to be in violation of laws, and to request information for the purpose of dispute resolution or litigation.- FSC may order a cessation of sales of the relevant products when significant losses are expected to consumers.- The burden of proof in liability for damage cases remains with the seller.- Courts may decide to terminate lawsuits arising from unresolved conflict resolution cases.- Filing a lawsuit against a
Nov 26, 2018
- FSC Reforms Card Processing Fee Rates
- The FSC plans to reform card fee rates as part of the government’s efforts to ease burdens on small merchants and self-employed business owners.Under the plan, credit card processing fees for small merchants with annual revenue of between KRW 500 million and KRW 1 billion will be lowered to 1.4 percent per transaction from 0.25 percent. For those with revenue between KRW 1 billion and KRW 3 billion, the rate will be lowered from the current 2.21 percent to 1.6 percent.The FSC estimates the cut will reduce an average of KRW 1.5 million in card processing fees for 198,000 merchants that generate annual revenue between KRW 500 million and KRW 1 billion. For those with annual revenue between KRW 1 billion and KRW 3 billion, falling to 46,000 merchants, the cut will save an average of KRW 2.1 million annually.The FSC also plans to create a task force with credit card companies to discuss ways to address excessive marketing expenses and strengthen their competitiveness.As “credit cards have become a dominant method of payments, accounting for 70% of private consumption, credit card companies need to pay more attention to their social responsibility and co-prosperity with merchants and consumers,” said FSC Chairman Choi Jong-ku at a meeting with CEOs of credit card companies last week.The changes in credit card process fees will take effect from the end of January 2019.* Please refer to the attached PDF for details.
Nov 02, 2015
- Credit Card Merchant Fees To Be Lowered
- The FSC plans to cut credit card merchant fee rates by 0.3%p~0.7%p from the end of January 2016 to reflect cost-saving factors in card business. As interest rates continue to remain at low levels, funding cost for credit card companies has decreased since 2012. The ban on VAN operators from providing large merchants with unfair rebate (implemented from July 2015) allows card companies more room for further cuts of VAN and merchant fees. The FSC expects lowering merchant fee rates would save KRW 670 billion for about 2.38 million merchants. * Please refer to the attached PDF for details.
Oct 22, 2015
- UAMCO To Expand Its Role Into Corporate Restructuring
- United Asset Management Company (UAMCO) will provide KRW 3.25 trillion in seed money for corporate restructuring of financially distressed companies. A corporate restructuring organization will be newly established under UAMCO next month to buy debts and shares of troubled companies through PEFs to help them get back on track. The FSC expects the new role of UAMCO to shift the initiative in corporate restructuring from creditor banks to market forces. * Please refer to the attached PDF for details.
Jun 23, 2015
- Plan to Strengthen Microfinance Support
- The FSC announced its plan to strengthen microfinance programs to reduce financial burden of low-income borrowers and to support their self-sufficiency. BACKGROUNDThe government has been driving policy efforts to reduce financial burden of low-income borrowers and enhance their access to financial services through various microfinance programs. The Happiness Fund, launched in March 2013, purchased delinquent loans of 2.8 million low-income borrowers to reduce their debt repayment burden and supported debt-restructuring of 410,000 borrowers as of May 2015. Four major government-backed microloans have also provided a total of KRW 11 trillion to more than 1.1 million low-income borrowers since 2013. In order to expand microfinance support in a sustainable way, the FSC came up with its plan focused on increasing the amount of policy microloans, while reducing debt servicing burden of low-income borrowers. Policy incentives will be also devised to give more benefits to those who faithfully repay their debt. Microfinance policy will be pushed forward to support the self-sufficiency of low-income families and individuals through comprehensive assistance for debt restructuring, job seeking and micro-savings. KEY POLICY TASKS1. Expand provision of policy loans, while reducing financial burden for low-income borrowers The provision of government-backed microloans will be expanded from the current KRW 4.5 trillion to KRW 5.7 trillion per year, which will increase the number of beneficiaries from the current 470,000 to 600,000 per year. To reduce debt servicing burden of low-income borrowers, the ceilings of government-backed micro-lending will be cut by up to 1.5%p starting from August 2015. The FSC will lower the statutory ceiling on lending by non-banking institutions from the current 34.9% to 29.9% through revisions to the Credit Business Act. 2. Provide more incentives for policy loan borrowers who faithfully repay their debt Out of borrowers of government-backed microloan
Mar 28, 2014
- One-Year Achievements of the Happiness Fund
- KEY ACHIEVEMENTSAs of March 2014, the Happiness Fund has supported debt restructuring of 249,000 debtors, out of a total of 294,000 applicants since its launch on March 29, 2013. For the last one year, the Happiness Fund has reached out to 294,000 debtors, 3.8 times more than the initially targeted number of 65,000 a year.Out of the 249,000 debtors, the Happiness Fund purchased debts of 168,000 borrowers from financial institutions since its launch. Debts of the remaining 81,000 were taken over from public asset management companies (AMCs).The 168,000 debtors were written off 51.8% of their debts, KRW0.9 trillion out of a total of KRW1.8 trillion (principal only), which is equivalent to write-offs of KRW5.73 million per person.The Happiness Fund helped those in debt restructuring program find jobs so that they could repay their debts on their own.From April 1 last year to March 24 this year, a total of 48,000 borrowers switch their high-interest loans to lower-interest ones with 10% or higher, which lowered their burden of interest payments by KRW 8.93 million.FUTURE PLANThe Happiness Fund plans to purchase student loans with the passage of the Korea Student Aid Foundation (KOSAF) Act, now pending in the National Assembly.The FSC will also make effort to launch an integrated system as soon as possible to manage and coordinate microfinance programs.* Pleaserefer tothe attachedPDF for details.
Oct 16, 2013
- Progress Report on National Happpiness Fund
- ACHIEVEMENT1. Debt restructuringSince the National Happiness Fund was officially launched in March 29, 2013, a total of 192 thousand individuals have applied for the debt restructuring from April 22 to October 10. Out of the applicants, 160 thousand individuals have had their debt restructured under the program. At the current pace of 1,300 applicants per day, a total of 210 thousand individuals are expected to apply for the debt restructuring until the end of October when the application is due. Under the program, overdue debt of more than 2.84 million individuals was acquired or transferred from lenders and public asset management companies (AMCs).2. Debt converted to low-interest loansFrom April 1 to September 30, a total of 350 thousand debtors had their high-interest loans worth KRW 378.7 billion converted to lower-interest loans.EVALUATIONThe number of beneficiaries far exceeds the initial estimation at the time the National Happiness Fund was launched. In six months since its launch in March, the Fund has already assisted 180 thousand debtors, more than half of the initially estimated number of 326 thousand individuals that the program would reach over five years.The National Happiness Fund outperformed similar programs by public AMCs in terms of the number of debt restructuring beneficiaries and the amount of purchased overdue debt.There were some concerns that the program might cause moral hazard among debtors; however, the problem of moral hazard has not been so serious as initially concerned as most of beneficiaries are found to be low-income borrowers struggling with debt overdue for long time.The government will continue to make efforts to help as many debtors as possible pay back their debt by closely working with relevant ministries and institutions.*Please read the attached file for details.
Aug 06, 2013
- Plan to Boost Personal Pension Plans
- BACKGROUNDWith the rapidly aging population, it is important to ensure financially-stable life for the elderly after their retirement through pension plans. Public pension scheme or retirement pension plans alone are not enough to provide sufficient retirement income. Therefore, there is a need to expand personal pension scheme so that more individuals could be better prepared for their elderly life after retirement.The FSC announced its plan to attract more persons to sign up for personal pension plans and to make them hold their pension plans for a longer period of time.KEY CONTENTS1. Provide various types of pension productsThe FSC will encourage financial institutions to provide various types of pension products tailored to retirees’ specific needs. For example, a savings-type pension product designed to allow its policy holders to withdraw their money for medical care if needed will be able to guarantee both retirement income and medical costs for the retirees.2. Enhance accessibility to pension products through Internet-only insurance providersThe FSC will permit the establishment of Internet-only life insurance providers and reduce sales commission paid to insurance agents per contract for Internet-only pension products.3. Reform the structure of business cost for pension insurance.Business cost of pension insurance consists of sales commission and other expenses incurred in business operation. Under the current structure of business cost, insurers require policy holders to pay sales commission mostly upfront, which consequently tends to lower the rate of return in the early phase of the contract period and reduce the amount of refund that policy holder could receive in case of policy cancellation before maturity. To address such problems, the FSC plans to gradually increase the percentage of installment payment of sales commission.4. Launch a web portal about pension productsA website will be launched in December 2013(tentatively) to provide a package of i