Financial stability is a prerequisite to innovation and inclusive finance policies. FSC maintains close market monitoring for any signs of market volatility and works to ensure stability in the financial markets. There are risk factors originating from abroad and from within. FSC focuses on making our economy more resilient from external shocks, such as a disruption in the global supply chain, and supporting Korea’s material, component and equipment industries to help boost their global competitiveness. Internally, FSC is closely monitoring the trends in household debt and seeking reforms to corporate restructuring in order to prevent domestic risk factors from turning into systemic risks. Policies aimed at increasing financial stability also include enhancing fairness in the financial markets by introducing a comprehensive legal framework for the supervision of financial conglomerates, improving market discipline and promoting transparency in corporate disclosure and accounting practices.
-
Oct 19, 2023
-
Oct 18, 2023
- FSC Holds Meeting to Check Financial Market Situation
- The Financial Services Commission held a meeting with the Financial Supervisory Service and industry representatives on October 18 to review financial market situations, potential risk factors and ways to handle them, chaired by FSC Vice Chairman Kim So-young. At the meeting, the authorities shared the same view that there are ongoing risk factors in financial markets due to the possibility of continuing high interest rates caused by a prolonged policy tightening in the U.S. and uncertainties surrounding the Israel-Hamas conflict. Therefore, the FSC, the FSS and financial industry groups agreed to maintain strong communication and cooperation. Despite these downside external risks, Vice Chairman Kim said that the domestic financial market conditions appear to be stable and that it is very unlikely that market situation will abruptly turn unstable as in the previous year since there are less uncertainties about the interest rate expectation in major economies and the financial institutions liquidity and risk management conditions have been improved compared to a year ago. However, as it is always possible that an external shocksuch as the one caused by the Israel-Hamas warcan deepen market anxiety when combined with vulnerabilities in domestic markets, Vice Chairman Kim said that it is necessary to continue to proactively deal with the vulnerable areas in domestic financial markets. With regard to the uncertainties surrounding the Israel-Hamas conflict, Vice Chairman Kim urged financial institutions to stay vigilant and secure a sufficient level of foreign currency liquidity to be adequately prepared. At the meeting, the authorities also discussed ways to avert excessive money moves in the financial sectors in the final three months of the year as competition to win over more deposits toward the end of the year led to market instability last year. In this regard, from September this year, the FSC and the FSS held a series of meetings with the financial sectors to che
-
Oct 12, 2023
-
Oct 12, 2023
-
Oct 05, 2023
-
Sep 26, 2023
- Government to Prepare Measures to Overhaul Rules on Mutual Financial Businesses
- The Financial Services Commission held the 3rd consultative body meeting on mutual financial businesses with related government ministries and mutual financial businesses on September 26. At the meeting, the authorities decided to draw up a joint plan to overhaul and update the current regulatory framework on mutual financial businesses in line with the growth of the sector and changes in their operating environment. The authorities also decided to set up and operate a daily monitoring system from mid-October to closely check the liquidity condition of mutual financial businesses. In terms of the size of total assets, between end-2013 and end-June 2023, the mutual finance industry has grown from KRW475 trillion to more than KRW1 quadrillion, with some entities growing to the level equivalent to a commercial financial institution within a region. In addition, the nature of their operation has shifted as loans extended to households by mutual financial businesses declined in recent years, while the volume of corporate lending from them has expanded significantly. Considering this growth and change in the operating environment of mutual financial businesses, the authorities exchanged views on the need to shore up rules on their prudential management and governance structure. Amid ongoing concerns about the soundness and liquidity conditions of the mutual finance industry, the authorities also shared views on the need to strengthen risk management in vulnerable areas while ensuring the provision of prompt liquidity support if needed. With regard to the application of key consumer safeguard measures guaranteed under the Financial Consumer Protection Act, for which most mutual financial businesses other than credit unions are exempted, the authorities talked about the need to introduce safeguard measures even before they are put into relevant laws. Lastly, the authorities went over the liquidity condition of mutual financial businesses. Although it is stable currently, th
-
Sep 25, 2023
-
Sep 25, 2023
- Online Loan Transfer Service to be Available for Housing Loans
- The Financial Services Commission announced that the online loan transfer service will be available for mortgage loans for apartments and jeonseloans for all housing types, allowing borrowers to compare different rates online and make a switch to the one offering lower interest rates. From May 31, 2023, the online loan transfer systems service availability has been expanded to include individual credit loans. As of September 15, a total of 67,384 transfers have been made with the volume of loans reaching more than KRW1.58 trillion. On average, applicants received interest rate cuts of 1.5 percentage points, and their total annual saving in interest payments is estimated to be more than KRW30 billion. The borrowers who switched loans saw their credit scores increase, and there has been more competition between financial companies in lowering interest rates. Based on these favorable outcomes, the authorities plan to expand the service availability to include home-backed mortgage loans for apartments and jeonse loans for all housing types. Previously, the process of switching a mortgage loan or a jeonse loan was ridden with inconveniences, as there were no sufficient loan comparison platforms and due to the hassle of having to visit multiple financial institutions. To help remove these inconveniences, the authorities will develop an online loan transfer infrastructure for housing loans joined by about 19 loan comparison platforms and some 32 financial companies. Relevant information sharing between financial companies will take place to ensure a seamless loan transfer experience for consumers. The loan transfer infrastructure for housing loans is expected to be set up by the end of 2023 and open to public in stages beginning in January 2024. The authorities expect that this will bring about more choices for financial consumers and open up new opportunities for financial companies and fintech businesses. * Please refer to the attached file for details.
-
Sep 25, 2023
- Policy Funds to Supply Venture Capital in Strategic Areas
- The Financial Services Commission held the 4th consultative body meeting on policy finance support with the related government ministries, policy financial institutions and a young entrepreneurs foundation on September 25. The consultative body on policy finance support was created last year to ensure more close alignment between the governments industrial strategies and supply of policy funds. In the five key strategic areas, the authorities last year pledged to supply a total of KRW91 trillion in policy funds support for 2023. As of August 2023, policy financial institutions have supplied a total of KRW73.8 trillion of policy funds support in the five key strategic sectors, achieving 80.4 percent of the annual supply target and surpassing the initial supply plan of 66.7 percent by the month of August. Along with concerns about an economic slowdown emanating from China, FSC Vice Chairman Kim So-young said that it is possible that interest rates and oil prices may continue to stay high for a while. Thus, in close coordination with relevant ministries, Vice Chairman Kim said that the authorities will work to ensure effective supply of policy funds to businesses to prevent funding shortages. To help ensure a continuous supply of policy finance support in each industry, the authorities discussed ways to more closely implement various industrial policy programs overseen by relevant government ministries with appropriate budget planning. In this regard, Vice Chairman Kim said that in order to provide policy finance support to various industrial sectors on a continuing basis, it is crucial to have a closer linkage between the supply of policy finance and fiscal planning. The authorities also discussed ways to overhaul the operation of Growth Ladder Fund, a fund dedicated for SMEs and venture businesses whose 10-year investment period has ended in August. The new Growth Ladder Fund will focus on investing in underfunded areas such as deep tech and climate sectors where the
-
Sep 21, 2023
- Capital Market Investigation Unit Commemorates Ten Years of Establishment and Lays Out Plans Ahead
- The Financial Services Commission held an event commemorating the capital market investigation units establishment ten years ago together with the Seoul Southern District Prosecutors Office, the Financial Supervisory Service and the Korea Exchange on September 21. The authorities also set out plans to bolster market surveillance, investigation and punishment on unfair trading activities in capital markets. Speaking about the significance of the work performed by the investigation unit, FSC Chairman Kim Joo-hyun said that along with the increasing number of investors in capital markets in recent years, the nature of unfair trading activities has also become diversified with a growing number of incidents involving more sophisticated and organized forms of crimes taking place. Since unfair trading activities constitute serious crimes that can erode investor confidence in capital markets, Chairman Kim said that it is crucial to maintain stringent countermeasures against them. In this regard, Chairman Kim emphasized on the importance of the measures being announced today as they are aimed at bolstering market surveillance, investigation and punishment on unfair trading activities in capital markets. More specifically, the measures will first strengthen inter-agency coordination and collaboration among all relevant authorities to ensure that the governments efforts to counter unfair trading activities are carried out as one team. Second, the authorities will improve the market surveillance and investigation process and shore up organizational capacity to ensure that effective detection, prompt investigation and strict punishment can take place on various types of unfair trading activities. Third, the authorities will work on seamless preparation for the enforcement of penalty surcharges as a newly available means for sanctioning unfair trading activities, while actively seeking to adopt additional sanctions mechanisms including an asset freeze, a trading ban and a ban on
-
Sep 13, 2023
- Government Holds Meeting on Household Debt and Introduces Measures to Strengthen Management
- The Financial Services Commission held a meeting to discuss the current household debt situation with officials from the relevant government ministries and organizations on September 13 and announced a set of measures aimed at strengthening management of household debt growth. With the volume of housing transactions recovering in July-August, the balance of household debt also continued to expand, led by mortgage loans in the banking sector. Especially, in July-August, the heightened competition between banks to introduce 50-year mortgage loans, in effect, pushed up the growth pattern. Under the current situation, 50-year mortgage loans can be utilized to circumvent the debt service ratio (DSR) rule by borrowers, and excessive lending or speculation in the property sector can potentially exacerbate the risk of household debt. As such, the authorities at the meeting agreed on the need to more closely manage and avert potential risks from long-term mortgage loans. Moreover, with regard to the issuance of special Bogeumjari loan, the pace of application has largely declined with upward adjustment of interest rates taking place in July-August. On special Bogeumjari loan, the authorities shared the same view that the availability of policy lending support through the remaining capacity of special Bogeumjari loan should focus on lower income households and non-speculative homebuyers. Strengthening Management of Household Lending in Banking Sector The government plans to take prompt measures to ensure that long-term mortgage loans (with 40-yr or 50-yr maturity) are not being utilized as a means of bypassing loan regulations. The authorities will ensure that banks are strictly following the principle of lending within the borrowers repayment capability and strengthen rules on debt service ratio (DSR) to prevent banks from engaging in loose management of household loan issuance, especially in their handling of 50-year mortgage loans. To this end, first, the authorities will
-
Sep 05, 2023
-
Aug 31, 2023
- Enhanced Transparency and Investor Protection Measures on CFD Transactions to Take Effect from September
- The Financial Services Commission announced that a set of improvements to the rules on contract for difference (CFD) trading will take effect from September 1. The improvement measures include (a) provision of more transparent investment information to investors, (b) resolving the issue of regulatory arbitrage vis--vis credit loans and (c) strengthening protection for retail investors. First, from September 1, information about the actual investor type (individual, institution or foreign investor) will be displayed and provided on Korea Exchange (KRX)s trade data system (data.krx.co.kr) for CFD transactions. In addition, as in the case with credit loan balance, from September 1, CFD balances will be disclosed to enable the use of these data as a reference for investment. The overall CFD balance can be found on a website (freesis.kofia.or.kr) operated by the Korea Financial Investment Association. Meanwhile, information about CFD balances by item will be ready for viewing on HTS (home trading system) and MTS (mobile trading system) within September as each securities firm needs to finish up preparing relevant data network system. Second, there are stronger investor protection measures taking effect from September 1. As a new over-the-counter (OTC) derivatives investment requirement, for CFD transactions, retail investors need to be verified of having sufficient investment experience by securities firms. Retail investors need to show that they have maintained a monthly average balance of KRW300 million or more for one year or more within the past five years for transactions of equity stocks, derivatives products or highly complex derivatives-linked securities. In addition, retail investors applying to attain the status of a qualified professional investor will need to go through an in-person verification process (including video call) conducted by a securities firm. Third, CFD traders will need to deposit at least 40 percent of the amount of CFD trading as a requireme
-
Aug 29, 2023
- FSC Announces Current Status in Effort to Soft-land Loan Forbearance Measures for SMEs and Small Merchants
- The Financial Services Commission announced current situation regarding the effort to soft-land the loan forbearance measures put in place for SMEs and small merchants that have been hit by COVID-19 on August 29. The maturity extension and payment deferment programs introduced in April 2020 in the wake of the COVID-19 pandemic have been extended for six months each time until now, and the loan forbearance programs are currently operating under the 5th extension plan announced in September 2022. Key details of the support measures under the 5th extension plan are as follows. First, borrowers on the maturity extension program can continue to get support in accordance with their current loan maturity structure (for six months or one year) until September 2025 without worrying about whether they will still be eligible for support. Second, borrowers on the payment deferment program can get support until September 2023, and they will draw up their debt payment plans in consultation with lending institutions. In accordance with their debt service plans, these borrowers will be able to spread out making payments for both principal and interests for up to 60 months (five years) until September 2028. A maximum one year of grace period can be granted on the amount of deferred interest payments. The number of borrowers as well as the total amount of outstanding loan balance subject to the maturity extension and payment deferment programs has been declining steadily. At the end of September 2022, there were about 430,000 borrowers with some KRW100 trillion in loan balance on the programs, but the numbers declined to 390,000 borrowers with KRW85 trillion by the end of March 2023 and KRW350,000 borrowers with KRW76 trillion by the end of June 2023. Compared to September 2022, by June 2023, there were about 80,000 less borrowers using the programs with a drop of about KRW24 trillion in the amount of loan balance, showing a drop of 20 percent and 24 percent, respectively. About KRW1
-
Aug 16, 2023
-
Aug 16, 2023
-
Aug 14, 2023
-
Jul 27, 2023
-
Jul 26, 2023
- Housing Loan Rules Temporarily Eased to Facilitate Landlords to Return Rent Deposits
- The government announced that the housing loan regulations applied on landlords who are using bank loans (excluding internet-only banks) to return rent deposits to their current tenants will be temporarily eased for one year from July 27, 2023 until July 31, 2024. Under this scheme, landlords will be able to obtain bank loans for the difference between the previous and current jeonseprice of their property. Instead of the 40 percent debt service ratio (DSR) currently in place, a 60 percent debt to income (DTI) ratio will be applied, while the rent to interest(RTI) ratio will be lowered from 1.25 to 1.5 times currently to 1.0 times. With unexpected declines in jeonse prices recently, the measures intend to support tenants to move out on schedule by addressing the problem of a delay in collection of rent deposits or worries about the risk of not being able to receive their rent deposits. When there is no subsequent occupant from whom the landlord can get rent deposit to pay the current tenant immediately, this program allows landlords to use bank loans up to the limit of the eased DTI and RTI ratios. In this case, the landlord will need to fill vacancy and get a subsequent tenant within one year to repay the loan. Declining jeonse prices can cause problems as tenants experience difficulties in receiving their rent deposits back and moving to new places. Therefore, the eased lending rules being applied temporarily for one year are intended to minimize market shock. In order to prevent a potential increase in household debt and to minimize the risk of rent deposits not being returned to subsequent tenants, the government will ensure that the landlords financial capacity to return deposits is thoroughly assessed and that sufficient safeguards are prepared for tenants. The eased lending rules will be implemented through an administrative guidance (July 27). Revision to the regulation on the supervision of banking business will also be completed soon in August. * Please re
-
Jul 25, 2023
- Government Approves Revised Rules to Improve Financial Dispute Mediation Procedures
- The Financial Services Commission announced that a revision bill of the Enforcement Decree of the Act on the Protection of Financial Consumers, which contains measures to improve the financial dispute mediation procedures, has been approved by the government during a cabinet meeting held on July 25. With financial products becoming increasingly diversified and complex in their type and structure, the number of disputes between financial consumers and financial companies has also increased. Due to the increased volume of dispute cases (28,118 in 2018 to 36,508 in 2022, based on the number of registered complaints), the time it takes to process mediations has also increased, causing inconvenience to consumers. Against this backdrop, the revision aims to enhance the speediness and independence of the financial dispute mediation procedures. First, a fast-track mediation process will be newly introduced, allowing cases to move onto the final stage of mediation committee without having to go through the settlement recommendation stage. Whether a case gets fast-tracked will be determined depending on the mediation amount in question and the extent of stakeholders involved. Second, additional standards have been introduced regarding the method of designating members of financial dispute mediation committee to enhance the level of independence in the operation of mediation committees and ensure fairness in how committee members are selected. The revision also includes some other improvement measures that have been brought up by FSCs ombudsman. The revised measures are scheduled to be publicly announced on August 1 and become effective after three months (November 2) from the day of announcement. * Please refer to the attached file for details.