Press Releases - Financial Services Commission

Press Releases

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Nov 30, 2020

FSC to Work on Revisions to Insurance Business Act for Implementation of IFRS 17 in 2023

Vice Chairman Doh Kyu-sang held a virtual meeting on November 30 to discuss ways to improve rules on insurance businesses in preparation for the implementation of IFRS 17 in 2023. At the meeting, Vice Chairman Doh announced the FSC’s plans to introduce a revision bill to the Insurance Business Act to the National Assembly during the first half of 2021.The International Accounting Standards Board (IASB) announced the finalized amendments to IFRS 17 in June and decided on a new effective date from 2023. In order to ensure a seamless implementation of IFRS 17, the FSC will set up and operate a task force charged with drawing up specifics of the revision to the Insurance Business Act to reflect the changes in accounting standard and prepare measures to support insurers with their capital reinforcement.The implementation of IFRS 17 will help improve the financial soundness and transparency of insurance businesses. The new accounting standard from IFRS 17 is expected to have a wide-ranging impact on the management of insurance businesses with respect to the development of new insurance policies, sales strategies, risk management, performance assessment, etc.The FSC expects that the implementation of IFRS 17 will provide an impetus for insurance businesses to seek more innovative management solutions and sustainable growth strategies.* Please refer to the attached PDF for details.
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Nov 26, 2020

FSC to Work on Preventing Economic Shocks and Managing Financial Market Risks

Vice Chairman Doh Kyu-sang held the 30th financial risk assessment meeting via teleconference on November 26 to check the implementation of the COVID-19 emergency financial support programs. At the meeting, Vice Chairman Doh also discussed the current financial market conditions and potential risks, credit lending in the banking sector and the government’s plans to extend the period of support available for vulnerable debtors.The following is a summary of Vice Chairman Doh’s remarks.(CURRENT ECONOMIC CONDITIONS) In November, consumer confidence and business survey index rose while exports increased for a second consecutive month. KOSPI rose to a record high of 2,617.76 points on November 24 on strong foreign net buying. The corporate bond and short-term money markets also show signs of stability. The low-rated corporate bond and CP purchase program (SPV) launched in July helped to improve market conditions. While considering the past performance and market conditions, the FSC will decide in December whether to extend the operation of the SPV beyond its initial six-month period.(POTENTIAL MARKET RISKS) The Korean economy and domestic financial markets have shown speedy recovery from the pandemic due to the government’s aggressive stimulus programs and abundant liquidity supply. However, household loans have expanded more rapidly in that process. Amid an ultra-low rate environment, high-yield hunting in stock and real estate markets and more recently in cryptocurrencies may pose risks. The resurgence of COVID-19 infection cases throughout the world may hold back economic recovery and the uncertainty surrounding major economies’ stimulus measures also pose risks. Against this backdrop, the FSC will work to ensure an effective management of household debt and closely monitor the flow of capital into high-risk assets.(RECENT TRENDS IN CREDIT LENDING) Since the FSC announced the measures to curb credit lending on November 13, the growth of credit loans in the bank
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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.
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Nov 25, 2020

FSC Holds Meeting on Future Outlook and Competitiveness of Financial Industry

The FSC held a meeting on the future outlook and competitiveness of the financial industry chaired by Vice Chairman Doh Kyu-sang on November 25. A new twelve-member expert review committee has been set up to lead the future outlook and competitiveness assessment of the financial industry. It will focus on lowering entry barriers into the financial industry and building financial infrastructures appropriate for the 4th industrial revolution era.VICE CHAIRMAN’S REMARKS(CHANGING ENVIRONMENT TASKS) The financial industry in Korea has continued to grow over the past decade. The size of Korea’s financial and insurance industry rose from 5 percent of GDP in 2009 to 5.6 percent of GDP in 2019, and the market capitalization of Korea’s capital markets rose to the twelfth in the world. However, there need to be more efforts to bring about qualitative improvements in the areas of global competitiveness and digital innovation. In response to an aging population and the low-rate and low growth environment, it is necessary to look for innovative solutions. With AI, big data and platform-based services being introduced by fintechs and big techs, it is necessary to accelerate digital transformation and gain consumer trust. The 4th industrial revolution has led to the blurring boundaries between financial and non-financial services, the unbundling of manufacturing and sales and the acceleration of the big blur where consumer experience is becoming ever more important.(ASSESSING THE COMPETITIVENESS OF FINANCIAL INDUSTRY) The future outlook and competitiveness assessment should focus on forecasting the future of the financial industry and looking for appropriate strategies based on long-term perspectives. It should offer an objective analysis on the current status of Korea’s financial industry, while checking to see whether the current regulations on entry and sales requirements are appropriate for the advancement of digital finance and innovation.FUTURE OUTLOOK COMPETITIVENESS
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Nov 19, 2020

FSC Designates 5 More ‘Innovative Financial Services’ for Regulatory Sandbox

The FSC added five more financial solutions to the financial regulatory sandbox on November 19, bringing the total number of ‘innovative financial services’ to 120 since launching the financial regulatory sandbox program on April 1, 2019.OVERVIEW OF NEWLY ADDED ‘INNOVATIVE FINANCIAL SERVICES’1.A mobile app-based real name verification service for bank customers who visit bank branch without a government-issued identification (Shinhan Bank, expected launch in September 2021)2.A safe driving reward program, which offers a gift certificate of KRW10,000 to navigation app1 users with a car insurance policy2 when their driving records collected via a driving-tag3 meet safe-driving standards (Carrot Insurance SK Telecom, expected launch in December 2020)3.A point-payment service for an insurance claim that allows customers to purchase products or services at a discount with given points on an online platform (Hanwhalife, expected launch in April 2021)4.A credit card membership solution, which allows merchants to join membership through a mobile app (PayHere, expected launch in July 2021)5.A mobile credit card terminal solution, which uses the app on a smartphone as a card reader instead of a terminal machine (ANB Korea, expected launch in May 2021)* Please refer to the attached PDF for details.
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Nov 18, 2020

Government to Increase Amount of IPO Shares Available for Retail Investors

BACKGROUNDWith the recent surge in the number of retail investors in stock trading, their demand for active participation in initial public offering (IPO) has increased. In the IPO process, however, it is important to secure the active participation of institutional investors to precisely price an IPO share. Securities firms as underwriters also play an important role in allocating shares. As stock prices fluctuate widely after an IPO, the expanded participation of retail investors in IPOs could make them more vulnerable to investment risks. The measures announced today are intended to ensure active participation of institutional investors and autonomy of the underwriters in an IPO process, while allowing more participation of retail investors.KEY MEASURES(ALLOCATION METHOD) Currently, shares available for retail investors, more than 20% of IPO stock, are allocated usually in proportion to the number of subscribed shares, or the amount of deposits. To give equal opportunities for all subscribers who deposited a minimum amount, more than half of shares available for retail investors will be allocated in the same amount, regardless of the amount of deposits.(LARGER ALLOCATION FOR RETAIL INVESTORS) i) Retail investors will be allocated a maximum 5% of unsubscribed shares for employee ownership; ii) As the 10% rule, which allocates 10% of public shares to high-yield funds, is set to expire by the end of this year, the amount of shares allocated to high-yield funds will be reduced to 5% from next year, while the remaining 5% will be allocated to retail investors.(SUBSCRIPTION AND ALLOCATION PROCESS) Multiple subscriptions by a retail investor using different underwriters in an IPO will be restricted. Securities firms will be required to inform retail investors of investment risks in subscription advertisements.IMPLEMENTATION SCHEDULEThe new rules will apply to securities registrations submitted after the revision to the Regulations on Securities Underwriting Business by
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Nov 18, 2020

FSC to Implement a New Regulatory Regime for Financial Benchmarks

The FSC enacted an enforcement decree and a supervisory regulation to provide details for the management of financial benchmarks as the Financial Benchmark Act (hereinafter the Act)1 will go into effect on November 27, 2020. KEY PROVISIONS (ESTABLISHMENT OF A REVIEW COMMITTEE) The FSC can establish a review committee to discuss the designation and cancellation of critical benchmarks and other important matters regarding financial benchmarks. (OPERATIONAL RULE ON CALCULATION) The enforcement decree provides details that should be included in an operational rule established by an administrator of critical benchmarks. The operational rule is aimed to stipulate requirements for administrators of critical benchmarks, contributors of input data, and users of critical benchmarks. ▪ Administrators are required to establish rules regarding methods and procedures to calculate critical benchmarks; prevention of conflict of interests; and management and supervision of input data contributors, etc. ▪ Contributors are required to establish rules regarding procedures for preservation and submission of input data; qualification and responsibility of the person in charge of data submission; and internal control, etc. ▪ Users are required to provide consumers with a document explaining the definition of critical benchmarks, methods and procedures of calculation, etc. (CRITICAL BENCHMARK MANAGEMENT COMMITTEE) The Act requires administrators of critical benchmarks to establish a committee for the management of critical benchmarks. The enforcement decree provides details regarding the composition and operation of the management committee. ▪ (COMPOSITION) The management committee shall consist of more than five members with expertise including at least two independent experts. More than half of the members shall have no conflict of interests. ▪ (RESPONSIBILITIES) The committee is responsible for deliberation and decision-making regarding important matters e.g. the appropriatene
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Nov 16, 2020

Government Lowers Statutory Cap on Lending Rates to Reduce Debt Burden on Low-income Borrowers

The government plans to lower a statutory cap on lending rates from the current 24% to 20% to reduce debt servicing burden on low-income borrowers.Since the maximum lending rate was lowered to 24% in 2018, there have been discussions for further cuts, given low interest rates and the need for easing financial burden on low-income households.The 20% statutory cap is expected to benefit 2.08 million borrowers, 87% of those who borrowed at higher rates, by saving KRW483 billion annually in debt servicing burden.In order to more flexibly respond to changes in market conditions, the government intends to adjust the maximum lending rates by revising the enforcement decrees on the Act on Registration of Credit Business and Protection of Finance Users and the Interest Limitation Act. The new statutory cap will apply in the second half of 2021.The government will also come up with complementary measures to ensure low- income borrowers’ access to financial services and better protect them from predatory practices by illegal lenders.* Please refer to the attached PDF for details.
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Nov 13, 2020

FSC Unveils Measures to Curb Credit Loans

Vice Chairman Doh Kyu-sang presided over the 29th financial risk assessment meeting on November 13. At the meeting, Vice Chairman unveiled the government’s plans to more effectively manage household debt and discussed the implementation of the COVID-19 financial support programs.BACKGROUNDHousehold debt in Korea expanded in the past two decades as the economy began to grow in the aftermath of the Asian financial crisis of 1997. In that period, the qualitative structure of household debt continued to improve due to an increase in the proportion of fixed-rate lending and installment payments. The soundness of household debt also improved as the volume of financial assets held by households has been more than twice that of financial debt since the end of 2009, and the default rate across all financial sectors has fallen to 0.70 percent at the end of June 2020 from 1.74 percent at the end of 2009. However, an excessive growth of household debt raises concerns about downside risks to the economy and financial system as the pace of household debt growth in relation to GDP accelerated from 82.9 percent in 2014 to 97.9 percent in 2019. Thus, there needs to be a continuous effort to slow down and more effectively manage the pace of the growth.The level of growth in household debt began to stabilize from the end of 2016. However, a shift toward expansionary policy this year in response to COVID-19 led to an upward trend with a rapid rise in credit lending in particular. Although increased borrowing by lower income households may be inevitable amid a prolonged pandemic situation, the possibility of credit loans moving into real estate markets poses risks. Therefore, the following measures have been drawn up to prevent risks.KEY MEASURESThe government will continue to maintain strong lending support for lower income households and small-scale businesses through existing stimulus programs amid a protracted pandemic situation. At the same time, efforts to more proactively manag
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Nov 12, 2020

4th Digital Finance Meeting Outlines Three Key Principles for MyData Industry

Vice Chairman Doh Kyu-sang presided over the 4th consultative body meeting on digital finance on November 12 and laid out the following three key principles for the MyData industry—(a) guaranteeing consumer rights to data ownership, (b) improving safety and scalability of MyData services and (c) creating a cooperative ecosystem for all stakeholders.The following is a summary of Vice Chairman Doh’s remarks.SIGNIFICANCE OF MYDATA INDUSTRYMyData industry has been introduced to strengthen consumer rights to data ownership and cultivate new data industries. With MyData services, individuals will be able to manage within a single platform not only their credit data from different financial institutions, such as banks, credit card companies and insurance companies, but also non-financial information, such as data on telecommunication and public utilities fees. There have been similar attempts in other countries, such as the EU, the UK and Japan, but their services have been restricted to bank account data.MyData industry in Korea is the first in its kind, offering an integrated credit data management platform beyond banking services. Currently, a preliminary license application review is taking place on thirty-five existing MyData business entities, with the application results expected to be announced at the beginning of next year. The market entrance of MyData businesses as new players will bring about a few changes. First, consumers will be able to practice data ownership instead of financial institutions in which consumer data is stored. Consumers’ control over their own data will be enhanced as they can easily check, manage, correct or delete according to their needs. Second, there will be increased competition and innovation in the financial industry. Large financial companies will no longer have a monopoly over consumer data, but instead be encouraged to compete over consumer utility. Lastly, MyData businesses will help create quality jobs in ICT and fintech s
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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 10, 2020

Volume of Public Financial Data Available on Open Financial Database Reaches 210 Million

The FSC announced that the volume of public financial data made available through the open financial database reached 210 million, rising about 377 percent from 44 million during the test run period between April and June this year. In addition, user satisfaction results showed that about 87.3 percent of users responded that they were well aware of the open financial database service, while some 83.3 percent of respondents stated that they were content with the service due to the availability of data usage at free of charge, abundance and diversity in data as well as accuracy.With a memorandum of understanding signed between the FSC and participating institutions, the FSC will continue to work on the advancement of the open financial database system. In close coordination with relevant institutions, the government will make concerted efforts to expand data diversity and continue to improve user satisfaction.* Please refer to the attached PDF for details.
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Nov 10, 2020

Government Approves Revised Rules on Vishing Prevention and Electronic Financial Transactions

The government approved revisions to the rules on vishing prevention and electronic financial transactions at a cabinet meeting held on November 10.The revision to the enforcement decree of the Special Act on the Prevention of Loss Caused by Telecommunication-based Financial Fraud and Refund for Loss, which is scheduled to go into effect on November 20, creates a legal form for victims of vishing scams to be able to report phone numbers associated with vishing while filling damage claims at the same time. This will help authorities more effectively block phone numbers associated with vishing.The revision to the enforcement decree of the Electronic Financial Transactions Act, which is scheduled to go into effect on November 20, establishes a legal ground for financial institutions to check personal identification from customers when returning lost cards at ATMs, etc.* Please refer to the attached PDF for details.
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Nov 06, 2020

Government Selects 247 Innovative Firms for Comprehensive Support

The government announced the selection of 247 business entities as part of the plans to cultivate one thousand innovative firms over the next three years at the National Economic Advisory Council meeting held on November 6. The selected businesses will be eligible to receive comprehensive financial and non-financial support. At the meeting, Chairman Eun Sung-soo spoke about the important role of finance in promoting innovation and preparing for a post-pandemic era.BACKGROUNDThe government introduced the plans to provide targeted support to more than one thousand innovative firms at the 12th Meeting of the Central Economic Response Headquarters on July 30 and has made the first round selection of thirty-two businesses from the newly emerging sectors and materials, parts and equipment industries. Through close coordination between the relevant ministries, the government chose 247 innovative firms for the second round of selection in the areas of high-tech manufacturing and automation, chemical and new materials, energy and ICT. The selected SMEs have a high potential for growth and represent different stages of business development.CHAIRMAN’S REMARKSThe government has prepared a diverse set of policies to bring about an economic recovery and help boost the competitiveness of industries. First, the plans to cultivate more than one thousand innovative enterprises over the next three years are designed to provide comprehensive financial support tailored to the needs of selected enterprises. For highly promising companies, the public sector will also provide assistance in raising investments from the private sector to facilitate their scale-up strategies.Second, the Korean New Deal fund in the amount of KRW20 trillion will be created to help channel market liquidities toward productive sectors. The K-New Deal fund makes it possible for retail investors to share profits from the K-New Deal investment projects, while ensuring a steady supply of venture capital to innovati
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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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Nov 04, 2020

FSC Selects Two More Fintechs as Designated Agents to Provide Financial Services

The FSC selected Finotek and Big Value as designated fintech firms on November 3, allowing them to provide financial services on behalf of Jeju Bank, BNK Kyongnam Bank and Kwangju Bank, and Pepper Savings Bank, respectively.Finotek will make available online refinancing brokerage platform service, which is expected to improve consumer convenience and efficiency while saving costs.Using big data and artificial intelligence technologies based on public data, Big Value will provide estimates on market prices and collateral values of atypical assets. Operating a big-data driven automated price estimation system for small-scale real estate properties, this service is expected to boost price transparency and enable financial businesses to improve their work efficiency.The FSC has selected a total of 33 designated fintech firms so far since May 2018. Application for the next round will be open from November 9, 2020 to January 8, 2021, with the results expected to be announced in March next year.* Please refer to the attached PDF for details.
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Nov 03, 2020

FSC to Work on COVID-19 Recovery, Cultivating Innovative Firms and Ensuring Market Stability

The FSC held the 28th financial risk assessment meeting via teleconference on November 3, chaired by Secretary General Kim Tae-hyun. During the meeting, officials discussed the progress in implementing the COVID-19 financial support including the small merchant support program and market stabilization measures.(CURRENT ECONOMIC AND MARKET SITUATION) Recent economic indicators suggest that the Korean economy is on a track to recovery. The economy grew 1.9 percent in the third quarter while industrial production, consumption and investment all increased in September. Consumer sentiment and the Business Survey Index rose in October as well. Domestic financial markets have also shown signs of stability. The volume of corporate bond, CP and short-term debt issuances has grown in September while credit spreads have been falling steadily, backed by the government’s efforts of launching the bond market stabilization fund and the SPV aimed at purchasing low-rated corporate bonds and CP. However, there still exist uncertainties surrounding the US presidential election and the scale of economic stimulus measures as well as concerns over a possible second wave of virus outbreaks. Thus, the government will closely monitor risk factors and take preemptive measures when necessary.(PROMOTING INNOVATION THROUGH STRONG FINANCING SUPPORT) Promoting the development of new technologies by innovative businesses is crucial to ensure a further progress in the post-pandemic era. The recently published banking sector technology assessment result for the first half of 2020 shows that the banking sector has been steadily working to improve their own technology capabilities and providing lending support to innovative businesses while serving as a conduit of the government’s emergency financial support programs. In addition, the best practice guidelines on sanctions exemptions for banks, established by the Korea Federation of Banks on October 26, provides more consistency in line with the ru
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Nov 03, 2020

FSC Proposes New Rules on AML Requirements on Virtual Assets

The FSC introduced a proposal of new rules to provide further details of anti-money laundering (AML) requirements on virtual assets under the revised Act on Reporting and Using Specified Financial Transaction Information (“the Act” hereinafter), which is scheduled to go into effect on March 25, 2021. The proposal will be available for public notice and comment for forty days from November 3 to December 14, 2020.KEY PROVISIONS(SCOPE OF VIRTUAL ASSET SERVICE PROVIDERS) The Act defines “virtual asset service provider (VASPs)” as business entities which engage in one or more of the following activities or operations: (i) purchase and sales of virtual assets; (ii) exchanges between virtual assets; (iii) transfer of virtual assets; (iv) safekeeping and administration of virtual assets; (v) intermediation or brokerages of virtual asset transactions; exchange of virtual assets; and (vi) other activities specified by the enforcement decree. The enforcement decree provides examples of VASPs subject to the Act such as virtual asset trading service providers, safekeeping/administration service providers, and digital wallet service providers. (SCOPE OF VIRTUAL ASSETS) The Act defines “virtual assets (VAs)” as digital tokens with economic value that can be digitally traded or transferred. The Act also provides a list of items which are not included in the scope of virtual assets: (i) digital tokens that cannot be exchangeable for fiat currencies, commodities and services and whose purpose of use is limited by the issuer; prepaid electronic payment methods or e-money; electronically registered stocks; electronic notes; electronic B/L; and others specified by the enforcement decree given the formats and features of transactions. The enforcement decree stipulates that prepaid cards, mobile gift cards and electronic bonds are excluded from the scope of VAs.(REQUIREMENTS FOR REAL-NAME ACCOUNTS) The Act mandates that VASPs use real-name accounts in their financial transacti
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Oct 28, 2020

Government to Closely Monitor Market Risks

The FSC held the 27th financial risk assessment meeting via teleconference on October 28, chaired by Secretary General Kim Tae-hyun. During the meeting, officials discussed issues surrounding the US presidential election, recent trends in the corporate bond and CP markets, anticipated discontinuation of LIBOR and other market conditions.(RISK MONITORING) Market experts noted that the US presidential election, soaring global asset prices and the possibility of an interest rate hike and currency appreciation as potential external risks to the Korean economy. First, uncertainties surrounding the outcome of the US presidential election and the ensuing policy disparities on COVID-19 stimulus, tax policy and the recovery pace pose risks to the economy. Second, as asset prices have seen a steep rise, price volatility may pose another risk. Third, due to expectations of stimulus measures, interest rates have gone up in advanced economies, and depending on the movement of the dollar and yuan, there exist downside currency risks in the Korean economy.(CORPORATE BOND CP MARKETS) Despite the general recovery trend in corporate bond and CP markets due to the government’s market stabilization efforts, there still exist disparities between low-rated and blue chip companies as well as between the corporate bond market and short-term money markets. The continuous decline of the spread of low-rated corporate bonds since June is a positive sign. However, the pace of the decline has been slow compared to high-rated bonds with the volume of total issuance yet to reach the level seen in the previous year. On the other hand, the low-rated CP and short-term debt issuance amount has recovered to a comparable level from the previous year. The FSC will continue to closely monitor corporate bond and CP markets and take stabilization measures using an SPV when deemed necessary.(DISCONTINUATION OF LIBOR) With regard to the anticipated discontinuation of LIBOR from 2022, financial institutions
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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
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