Press Releases - Financial Services Commission

Press Releases

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Dec 09, 2020

Improvements to Indemnity Health Insurance to be Introduced in July Next Year

The FSC announced the introduction of improvements to the current indemnity health insurance system beginning in July next year, which will help prevent moral hazard and lower premiums for the insured. The FSC expects that the improved structures will help ensure that indemnity health insurance plans can continue to provide important social safety nets alongside the state-operated national health insurance (NHI) service.BACKGROUNDIndemnity health insurance policies provide important social safety nets as they offer coverages to health care costs that are not covered by the NHI. As of the end of 2019, some 38 million individuals were covered by indemnity health insurance plans. When it was first introduced in 1999, the availability of fully covered plans guaranteeing no out-of-pocket expenses created moral hazard of excessive hospital visits and medical testing. Excessive use of health care services by a few has been pushing up premiums for others while insurers have seen a spike in loss ratios. A continuation of this trend in indemnity health insurance raises concerns about rising premiums and the sustainability of indemnity health insurance services. As such, the FSC has prepared the following measures to address these issues.KEY MEASURESI. LOWER PREMIUMS WHILE GUARANTEEING THE SAME LEVEL OF COVERAGE(COVERAGE) New indemnity health insurance policies will provide the same level of coverage as previously available on most types of illnesses and injuries with the maximum coverage of about KRW100 million for both in- and outpatient services. However, in order to prevent moral hazard of excessive and unnecessary use and provision of medical services, out-of-pocket expenses and deductions for outpatient services will be increased.(PREMIUM) Due to the increase in out-of-pocket expenses and outpatient deductions, insurance premiums will be significantly lower compared to the previous levels. Considering high levels of loss ratios, it is expected that premiums of newly avai
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Dec 09, 2020

Legal Grounds Established for Supervision of Non-holding Financial Groups

The FSC announced the establishment of new legal grounds for the supervision of non-holding financial groups as the new legislation was passed at a plenary session of the National Assembly on December 9.KEY PROVISIONS- NON-HOLDING FINANCIAL GROUPS: Have two or more subsidiaries operating financial businesses with total financial assets of KRW5 trillion or more.- INTERNAL RISK MANAGEMENT: An internal group-wide risk management body should be established led by the group’s top representative company to oversee the group-wide risk management policy, handle regulatory compliance, pursue prudential management, etc.- INTERNAL ASSESSMENT: Non-holding financial groups should conduct self-assessment on their capital adequacy requirements to maintain financial soundness while taking into account intra-group transactions and risk concentrations.- REPORTING DISCLOSURE REQUIREMENTS: Non-holding financial group’s top representative company is required to report and disclose the group-wide capital adequacy status and risk factors to the FSC, which in turn may request a submission of a management improvement plan if deemed necessary to prop up capital or reduce risky assets.The authorities expect that the new legislation on the supervision of non-holding financial groups will help foster a self-regulating risk management system for the regulated entities. The authorities will be able to more preemptively manage systemic risks in financial markets while minimizing the possibility of risk transfers and preventing damages to consumers and investors. In this regard, the government will continue to work for the advancement of both group-wide and systemic risk management schemes. * Please refer to the attached PDF for details.
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Dec 07, 2020

FSC to Introduce Routine Inspection of Personal Data Protection at Financial Institutions

The FSC unveiled its plans to introduce a routine inspection of personal data protection at financial institutions on December 4 to ensure consistency in data protection and improve accountability. The plans include establishing specific inspection standards according to the data lifecycle, providing feedbacks on a regular basis through Financial Security Institute and setting up self-inspection guidelines for financial institutions. The routine inspection on the performance of data protection is scheduled to go into effect on February 4, 2021.BACKGROUNDWith the availability of new technologies, data pseudonymization/anonymization, data convergence and so on, the process of monitoring and inspecting how financial institutions handle data protection needs improvements. In this regard, the following issues have been identified as problematic—(a) lack of specific inspection standards, (b) difficulty in carrying out a comprehensive and systematic inspection on more than 3,000 financial institutions and (c) lack of self-inspection guidelines for financial institutions. To address these issues, the FSC has drawn up the following measures.KEY MEASURESI. IMPROVE INSPECTION CRITERIA STANDARDSIn order to ensure a close inspection of the performance of data protection, specific inspection criteria will be established with 9 overall categories and 143 subcategories. The detailed inspection criteria will reflect the different stages of data lifecycle and will be measured in four levels—(a) compliant, (b) partially compliant, (c) not compliant and (d) not applicable.To guarantee a systematic management and monitoring of the newly available technologies, such as data pseudonymization/anonymization, data convergence and so on, a close inspection on the compliance status of technical and managerial data protection measures will be carried out. Financial institutions with outstanding performance and an accident-free status for a certain period will be awarded safety certification
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Dec 03, 2020

FSC to Introduce Improvements to Subscription Economy's Payment and Refund System

The FSC announced its plan to improve rules on subscription businesses’ payment system to enhance consumer protection and user experience on December 3.Subscription businesses generally attract customers by offering free subscription to their services first. However, once the free subscription period expires, the procedure of informing customers about the details of recurring payments and their cancellation and refund policy has remained inadequate. As such, the FSC plans to work on the following measures to strengthen consumers’ right to information, simplify the cancellation process and make more refund options available in subscription businesses.KEY MEASURESI. ESTABLISH STANDARDIZED TERMS AND CONDITIONS(DEFINITION OF RECURRING PAYMENTS) A clearly defined scope of recurring payments will be introduced on the standardized terms and conditions.(NOTIFICATION REQUIREMENT) Subscription businesses will be required to notify their customers at least seven days prior to switching their services from free offering to recurring payment-based services.(CANCELLATION) The process of cancelling a subscription service will be made easier through mobile applications and online platforms and the cancellation of services will be made available even after the regular customer service hours.(REFUND POLICY) When a cancellation of recurring payments occurs, only the amount of fee commensurate with the used monthly service may be charged, while more refund options will be made available through credit cards and account transfers.II. STRENGTHEN PAYMENT GATEWAYS’ SUPERVISION OVER THEIR AFFILIATESBy introducing revisions to the Enforcement Decree of the Specialized Credit Finance Business Act, legal grounds will be established that will allow payment gateways to strengthen supervision over their affiliates and ensure that their affiliates provide appropriate transaction information to customers.* Please refer to the attached PDF for details.
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Dec 02, 2020

FSC Revokes Business Registration of Lime Asset Management

The FSC announced its decision to revoke the business registration of Lime Asset Management on December 2 and to impose a fine of KRW950 million and issue suspension of duties on its staff and executive personnel. According to inspections carried out by the Financial Supervisory Service, Lime Asset Management was found to have engaged in illegal and inappropriate fund management activities, which caused a large scale suspension of redemptions for investors in the amount of about KRW1.7 trillion. To help minimize losses for investors, between November 2019 and September 2020, the financial authorities focused on closely examining fund assets managed by Lime Asset Management, drawing up a redemption plan for investors and setting up a new fund manager (Well Bridge Asset Management) to take over funds from Lime Asset Management. As such, the FSC also ordered a transfer of some 215 funds currently managed by Lime Asset Management to Well Bridge Asset Management effective from December 3, 2020. * Please refer to the attached PDF for details.
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Nov 11, 2020

Household Loans, October 2020

The outstanding balance of household loans in all financial sectors rose KRW13.2 trillion from the previous month in October 2020 (up 7.1% year-on-year). The household loan balance increased KRW10.6 trillion in the banking sector and KRW2.5 trillion in the non-banking sector.By type, mortgage loans increased KRW7.2 trillion in October, rising KRW0.1 trillion from the previous month (up KRW3.2 trillion y-o-y). In the banking sector, mortgage loans expanded KRW6.8 trillion while jeonse loans grew at a slower rate (up KRW3.0 trillion m-o-m). Mortgage lending by non-banks saw an increase of KRW0.4 trillion from the previous month. Other types of loans went up KRW6.0 trillion as credit-based lending by both banks and non-banks rose KRW3.8 trillion and KRW2.1 trillion, respectively, due to seasonal factors.The financial authorities will closely monitor trends as the volume of household loans generally tends to expand in the fourth quarter. While considering the need to minimize downside effects to lower income households and small-scale businesses, the government will prepare plans to more effectively manage household debt.* Please refer to the attached PDF for details.
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Nov 06, 2020

FSC Holds Meeting on Financial Market Conditions

FSC Chairman Eun Sung-soo held a meeting to review the effects of the US presidential election on financial markets at home and abroad on November 6. As there are possibilities of growing market volatilities in the financial markets in the wake of the US presidential election, the FSC will continue to stay alert and closely monitor market conditions.At the meeting, Chairman Eun stressed the importance of maintaining market stabilization efforts as well as legislative efforts to improve rules and regulations, such as strengthening sanctions on illegal stock short selling activities, allowing more short sale opportunities for retail investors and improving the current IPO system.Chairman Eun also discussed the importance of maintaining strict public health safety and preventive measures at individual financial institutions in order to ensure that the spread of COVID-19 does not pose risks to financial markets. To this end, Chairman Eun called for strong cooperation from the authorities in preventing the spread of the virus.* Please refer to the attached PDF for details.
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Oct 13, 2020

Household Loans, September 2020

The outstanding balance of household loans in all financial sectors rose KRW10.9 trillion from the previous month in September 2020 (up 6.8% year-on-year). The household loan balance increased KRW9.7 trillion in the banking sector and KRW1.1 trillion in the non-banking sector.By type, mortgage loans increased KRW7.1 trillion in September, growing KRW0.8 trillion from the previous month (up KRW4.4 trillion y-o-y). In the banking sector, jeonse loans rose KRW3.5 trillion while mortgage loans expanded KRW2.0 trillion. Mortgage lending by non-banks saw an increase of KRW0.4 trillion from the previous month. Other types of loans went up KRW3.8 trillion as credit-based lending by both banks and non-banks rose KRW3.0 trillion and KRW0.7 trillion, respectively.The financial authorities will closely monitor trends in household loans to prevent risks to the economy and draw up measures when necessary in close coordination with the relevant ministries.* Please refer to the attached PDF for details.
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Oct 06, 2020

Government Approves Revised Rules to Facilitate Accounting and Audit Reforms

The government approved the revisions to the Enforcement Decree of the Act on External Audit of Stock Companies during a cabinet meeting held on October 6. The revised rules will become effective on the day of promulgation.KEY DETAILS(a) Remove regulatory redundancies to help relieve burdens for companies(b) Establish a two-thirds quorum rule for decision making by the standard audit hours deliberative committee to help reflect more balanced opinions from both the company and the auditor(c) Rephrase the provision that specifies the standards of companies that are subject to external audit to help companies better understand those standardsEXPECTATIONThe government expects that these revisions will help relieve some of the regulatory burdens for stock companies and enable more balanced discussions between relevant stakeholders, which will help lay foundations for the beginning of the accounting and audit reforms.* Please refer to the attached PDF for details.
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Oct 05, 2020

Household Loans by Five Major Banks in September 2020

The outstanding balance of household loans by five major banks increased KRW6.6 trillion in September 2020, rising at a slower rate compared to the previous month (up KRW8.4 trillion).Mortgage loans rose KRW4.5 trillion in September, rising slightly faster than KRW4.2 trillion in August, while credit lending expanded KRW 2.1 trillion, declining from KRW4.0 trillion in the previous month.The financial regulators will continue to monitor the application of DSR on individual borrowers by lending institutions while working on the management of the household debt level. The authorities will closely monitor trends in household debt and take necessary measures in close coordination with other relevant ministries.* Please refer to the attached PDF for details.
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Sep 24, 2020

FSC and FSS Sign MOU with Bank of Thailand

The FSC and the FSS signed a Memorandum of Understanding (MOU) with the Bank of Thailand on comprehensive cooperation in the areas related to the financial sector and innovation in financial services.The MOU provides a basis for mutual cooperation among the three institutions on experience sharing, technical assistance and exchange of information on matters pertaining to our respective functions such as supervisory model, operational mechanism and regulations on innovative financial services. These arrangements will help enhance supervisory efficiency and promote innovation under the evolving financial service landscape.The MOU entered into effect on September 24, 2020.* Please refer to the attached PDF for details.
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Sep 17, 2020

Insurance Companies to Begin Offering Policies for Autonomous Vehicles in September

The FSC announced on September 17 that twelve insurance companies will begin to offer policies specifically covering autonomous vehicles for commercial purposes from the end of September this year.The establishment of the safety standards on autonomous vehicles (effective from July 2020) and the revision to the Guarantee of Automobile Accident Compensation Act (effective from October 2020) provide legal grounds for commercializing partially autonomous vehicles (level-3) from October this year.KEY DETAILSThe newly available insurance policies for autonomous vehicles will clearly define the scope of auto accident compensation for accidents occurring while in self-driving mode. The policy will specify that Insurance companies will pay out compensation to the policyholder first and then request reimbursement from the automaker if any defects are identified.With regard to the premium, insurance policies covering autonomous vehicles will be about 3.7 percent higher compared to the existing commercial auto insurance premiums.EXPECTATION AND FURTHER PLANThe newly available insurance policies for autonomous vehicles will help promote the advancement of AV technologies while eliminating blind spots in auto accident coverage. As such, the financial authorities will work for the development of insurance policies covering non-commercial autonomous vehicles as well by 2021.* Please refer to the attached PDF for details.
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Sep 16, 2020

Financial Groups to Provide Integrated Disclosures

The FSC announced the availability of integrated disclosures by financial groups on September 16. Pursuant to the best practice guidelines on the supervision of financial conglomerates, financial groups will begin to disclose information on 25 specific criteria including their management status, governance structure and capital adequacy requirements through a group-wide integrated disclosure format starting from the end of September this year.KEY DETAILS(DISCLOSURE INFORMATION) Financial groups are required to disclose information on 8 specific areas and 25 sub-categories as follows—(a) general management status, (b) corporate governance structure, (c) internal control, (d) risk management, (e) capital adequacy requirements, (f) internal transaction, (g) capital or credit extension to major shareholders and (h) other relevant information.(PERIOD) Quarterly disclosures are due within three months prior to the end of every quarter and annual disclosures are due within five months and fifteen days from the end of every fourth quarter.(HOW TO ACCESS) A major representative company of the financial conglomerate will put up group-wide integrated disclosure information on its website after gathering and confirming disclosure information from the group’s subsidiaries.EXPECTATIONWith the availability of information on group-wide risk factors and risk management status in an easily understandable format, the newly introduced integrated disclosures by financial groups will provide useful information to consumers and investors while boosting risk management capabilities of financial companies through market-based approaches. Meanwhile, the government will continue to work for the enactment of the legislation on the supervision of financial conglomerates.* Please refer to the attached PDF for details.
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Sep 09, 2020

Household Loans, August 2020

The outstanding balance of household loans in all financial sectors rose KRW14.0 trillion from the previous month in August 2020 (up 6.2% year-on-year).By type, mortgage loans increased KRW6.3 trillion in August, rising KRW2.0 trillion from the previous month (up KRW3.1 trillion y-o-y). In the banking sector, jeonse loans rose KRW3.4 trillion and mortgage loans expanded KRW1.9 trillion. Mortgage lending by non-banks saw a rise of KRW200 billion from the previous month. Other types of loans went up KRW7.7 trillion as credit-based lending by both banks and non-banks rose KRW5.7 trillion and KRW2.0 trillion, respectively.The financial authorities are closely monitoring trends in household loans to see whether the recent spike is a temporary phenomenon or a more permanent trend. Based on the comprehensive assessment, the government will draw up measures to systematically manage household loans.* Please refer to the attached PDF for details.
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Aug 25, 2020

New Bill on Supervision of Financial Conglomerates Moves ahead for Enactment

The government approved the bill on the supervision of financial conglomerates during a cabinet meeting on August 25, which will be submitted to the National Assembly for enactment at the end of August.KEY PROVISIONSThe proposed bill on the supervision of financial conglomerates provides a legal ground for the supervision of non-holding financial groups with financial assets of KRW5 trillion or above and contains the following key regulations.► FINANCIAL GROUPS: Financial groups are defined as those with financial assets in the amount of KRW5 trillion or more, except financial holding companies and state-owned banks.► INTERNAL RISK MANAGEMENT: An internal group-wide risk management body should be established and operated, led by the group’s top representative company to oversee the group-wide risk management policy, regulatory compliance, prudential management, etc.► INTERNAL ASSESSMENT: Financial conglomerates should conduct self-assessment on the capital adequacy to maintain their financial soundness while taking into account intra-group transactions and risk concentrations.► REPORTING DISCLOSURE REQUIREMENTS: The group’s top representative company is required to report and disclose the group-wide capital adequacy status and risk factors to the FSC, which in turn may ask for a management improvement plan if deemed necessary to prop up capital or reduce risky assets.* Please refer to the attached PDF for details.
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Aug 12, 2020

Household Loans, July 2020

The outstanding balance of household loans in all financial sectors rose KRW9.0 trillion from the previous month in July 2020 (up 5.7% year-on-year). The household loan balance increased KRW7.6 trillion in the banking sector and KRW1.4 trillion in the non-banking sector.By type, mortgage loans increased KRW4.1 trillion from the previous month in July (up KRW1.9 trillion y-o-y). Jeonse loans rose KRW2.7 trillion in the banking sector while group lending grew at a slower rate. Mortgage loans in non-banks saw a rise of KRW200 billion from the previous month. Other types of loans went up KRW4.9 trillion as credit lending by both banks and non-banks rose KRW3.7 trillion and KRW1.3 trillion, respectively.The government will closely monitor trends in jeonse loans and credit loans in order to effectively manage household debt.* Please refer to the attached PDF for details.
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Jul 22, 2020

FSC Approves BC Card and Woori Bank's Holding of 34% and 19.9% Each in K Bank

The FSC announced its decision to approve BC Card and Woori Bank’s holding of 34 percent and 19.9 percent stake each in K Bank on July 22.Under the Special Act on Internet-only Banks, non-financial companies including ICT firms are permitted to hold a maximum of 34 percent of shares with voting rights.* Please refer to the attached PDF for details.
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Jul 16, 2020

FSC to Work on Enhancing Transparency in Financial Regulatory Environment

FSC Chairman Eun Sung-soo presided over the 43rd financial hubs establishment committee meeting on July 16, and discussed ways to reassess the government’s financial hub policy following recent changes in market environments at home and abroad.The following is a summary of Chairman Eun’s remarks.The competition over the status of regional financial center in Asia has been accelerating. The Korean government has been pursuing its financial hub policy since it first unveiled the strategy in 2003 to turn Korea into a financial hub in Northeast Asia. However, due to increasing uncertainties in the global financial markets, financial companies have been reducing the number of overseas branches, and it has become more difficult to attract foreign based financial companies in Korea.Despite difficulties, it is important to regroup strategies based on the strength of our financial industry and renew our efforts. In this regard, the rising demand for asset management and growth in foreign investment continue to accelerate the globalization of the asset management industry. In addition, the rising demand for development finance in neighboring countries provides new opportunities for Korea through the government’s new northern and southern economic cooperation initiatives.Compared to other major financial centers in Asia, high corporate and income tax rates, lack of flexibility in labor markets and that of transparency in financial regulations have been pointed out as obstacles for Korea in becoming a major financial center in the region. From the perspective of macroeconomic management, the government’s capacity to change its tax or employment rules just for the purpose of advancing its financial hub policy will be limited. In the meantime, the government will work to enhance transparency in our regulatory environment and find innovative ways to improve competitiveness of our financial industry.* Please refer to the attached PDF for details.
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Jul 14, 2020

Government to Introduce Personal Credit Rating System Using NPS Contributions Data

The FSC and the Ministry of Health and Welfare announced on July 14 that an improvement to the personal credit rating scheme using information about individuals’ national pension contribution payments will be made available in October this year.The government has worked on improving the personal credit rating system using nonfinancial data, such as information about individuals’ contributions toward national pension and health insurance, along with the National Pension Service (NPS) and Korea Credit Bureau (KCB).In December 2019, the FSC designated Korea Credit Bureau’s data analysis service using homomorphic encryption technology as an ‘innovative financial service’ to be included in the regulatory sandbox program, which allowed data convergence between KCB’s credit data and NPS’ contributions data while paving the way for developing an improved credit rating model.Taking into account research findings that show a positive correlation between diligent contribution payments to national pension and low probability of loan defaults, the improved personal credit rating system will offer additional points to personal credit scores for the period of diligent contribution payments.As the improved credit rating system will go into effect in October this year, national pension subscribers are eligible to receive maximum 41 additional points for their credit scores. Up to 550,000 KCB-registered national pension subscribers are expected to see their credit scores go up. In particular, recent graduates and young adults who have thin credit records will benefit from this system.It also marks the first time application of homomorphic encryption technology in the world.* Please refer to the attached PDF for details.
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Jul 09, 2020

Household Loans, June 2020

The outstanding balance of household loans in all financial sectors rose KRW8.5 trillion from the previous month in June 2020 (up 5.4% year-on-year).By type, mortgage loans increased KRW5.1 trillion in June (up KRW2.4 trillion year-on-year). Regular mortgage loans, jeonse loans and group lending expanded KRW5.0 trillion in the banking sector, while non-banks saw an increase of KRW20 billion. Other types of loans showed an increase of KRW3.5 trillion (up KRW1.1 trillion year-on-year) as the demand for credit loans went up.The government will closely monitor rising demand for credit loans while continuing to work on the stable management of household debt.* Please refer to the attached PDF for details.
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