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Mar 04, 2020
- FSC Plans to Introduce Consumer Credit Bill to Enhance Financial Inclusiveness
- The FSC announced on March 3, 2020 its plans to draft a bill on consumer credit and push for the enactment of the legislation within this year in order to enhance financial inclusiveness.The new legislation will replace the current Act on Registration of Credit Business, etc. and Protection of Finance Users. It will take essential provisions on the contents and procedures of loan contracts from the Credit Business Act, while establishing new regulations on delinquent debt management, termination of contracts, etc.BACKGROUNDUnder the current personal debt management system, it is extremely difficult for delinquent debtors to recover on their own while facing a risk of turning into long-term delinquent debtors.► Only about 14,000~17,000 delinquent debtors out of 26,000~28,000 every year are found to seek personal debt restructuring programs while many choose not to.► The burden of arrears and repayments as well as the pressure of debt collection cause disruptions and distress to daily lives.► The debt collection process heavily focuses on the performance of debt collection while overlooking issues related to consumer trust.KEY PROVISIONSThe improvement will focus on providing more safeguards for debtors and providing more chances to get back on their feet by modifying the structure that currently tolerates excessive debt collection practices.The government will work to establish a legal principle for a balanced approach to debt collection that takes into account not only debt collection performance but also consumer trust.I. PROVIDE TAILORED SUPPORT TO DEBTORS FOCUSING ON THEIR NEEDSEstablish a new debtors’ right through which they can request debt restructuring from financial institutions, which will help them find ways to get back on their feet and resume normal economic activities.► Delinquent debtors will have an option to request a debt restructuring program when facing diminished debt servicing capacity. Upon such a request, financial institutions will
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Feb 26, 2020
- Government Supports Smooth Operation of Corporate AGMs amid COVID-19 Spread
- The government announced supportive measures on February 26, 2020 to ensure the safe and smooth operation of companies’ annual general meetings (AGMs) as the spread of COVID-19 may delay the submission of financial statements, audit and annual reports by some companies operating subsidiaries in China.Under the Financial Investment Services and Capital Markets Act and the External Audit Act, listed companies are required to submit (i) a financial statement to auditors no later than six weeks before the AGM; (ii) an audit report a week before the AGM; and (iii) an annual report within 90 days after the end of each fiscal year. If companies miss such deadlines, they may face administrative sanctions or penalties.Given that the outbreak of COVID-19 is an unexpected and unavoidable event for both companies and auditors, the Securities and Futures Commission (SFC) will grant an exemption from administrative sanctions for companies and auditors who satisfy the following conditions: (i) A company’s fiscal year ending on December 31, 2019; (ii) A company or an auditor must satisfy one of the followings:- COMPANY whose main operations (including subsidiaries) are based or conducted in China or domestic locations designated as “COVID-19 affected areas;” and whose financial statements or external audits were delayed by the outbreak of COVID-19 or disinfection measures- AUDITOR cannot complete an external audit for the fiscal year of 2019 due to the outbreak of COVID-19 or disinfection measures, such as closure of auditor’s office, etc. (iii) A company or an auditor is under ineluctable circumstances equivalent to (i), (ii). Companies or auditors should submit applications to the Financial Supervisory Service (FSS) or the Korean Institute of Certified Public Accountants (KICPA) from February 28 to March 18 to qualify for an exemption from administrative sanctions.The FSS and the KICPA will submit their reviews of application to the SFC, scheduled to be held at the end
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Feb 24, 2020
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Feb 12, 2020
- Government to Support Educational Programs to Cultivate Digital Finance Specialists
- The Financial Services Commission and the Seoul Metropolitan Government will provide KRW19 billion over a 4-year period (2020-2023) to launch educational programs aimed at cultivating more specialists in digital finance.Digital finance provides financial services using key innovations in information technology, such as big data and artificial intelligence. It has created new jobs and brought significant changes to how financial services are delivered.Due to rapidly accelerating digital transformation in the financial sector, the demand for more professionals working in digital finance has been rising.The degree and non-degree programs will offer advanced theory and practice courses on diverse areas, such as ‘IT deep learning,’ ‘big data crawling and text analysis,’ ‘cloud computing,’ ‘blockchain in finance,’ etc.The programs are targeted at the current financial industry workers, prospective fintech entrepreneurs, fintech professionals, and those who are preparing for financial sector jobs.The government will select an educational institution or a consortium in March to be designated as the digital finance education provider. Universities, research and/or other finance-related institutions are eligible to apply.* Please refer to the attached PDF for details.
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Feb 05, 2020
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Jan 30, 2020
- FSC to Introduce Coinsurance for Primary Insurers
- FSC Vice Chairman Sohn Byungdoo presided over a meeting on improving the soundness of assets held by primary insurance companies on January 30, 2020.The measures to introduce coinsurance was discussed at the meeting to help insurance companies adjust or reduce debts in preparation for the implementation of the new accounting and solvency rules, the International Financial Reporting Standards (IFRS) 17 and K-Insurance Capital Standard (K-ICS).The introduction of coinsurance is expected to help improve financial soundness of primary insurers as they are able to cede risks associated with insurance products to reinsurance companies.COINSURANCECoinsurance is a type of full-risk reinsurance through which primary insurers can transfer risks to reinsurers at premiums. Coinsurance is different from traditional reinsurance because it allows primary insurers to cede an entire block of risks including the investment portion and expense loading of the premium, instead of only the risk portion of the premium. Traditional reinsurance normally has a yearly renewable term whereas coinsurance offers longer term deals.EXPECTATIONI. Primary insurers with high interest rate products can cede risks associated with interest rate volatility or cancellation to reinsurers, thereby boosting their financial soundness.II. Issuing new capital stocks or subordinated debentures is an expansion of the available capital, whereas coinsurance is downsizing the required capital, which will offer a new solution for managing risk exposures for insurance companies.III. Coinsurance has been widely used in the European and the US insurance markets. The know-hows and asset management experiences of the overseas reinsurers will be useful.SPECIFIC PLANSTo introduce coinsurance, the government will make the following changes to the current regulations and rules on the supervision of insurance businesses – a) permit coinsurance, b) make accounting methods clearer, c) improve the risk-based capital ratio, and