Press Releases - Financial Services Commission

Press Releases

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Oct 07, 2020

Vice Chairman Discusses Importance of Steady Financial Support for SMEs and Small Merchants

Vice Chairman Sohn Byungdoo held the 24th financial risk assessment meeting via teleconference on October 7 and discussed the implementation status of COVID-19 financial support programs and other market conditions.The following is a summary of Vice Chairman Sohn’s remarks.(COVID-19 FINANCIAL SUPPORT) The latest COVID-19 emergency support programs announced in September have been operating smoothly. The second round of emergency loan program for small merchants began to provide support on September 23, with its recently increased lending cap and broadened recipient base. Since the improvements became effective, some KRW350 billion worth of loans were issued within a week with interest rates also falling compared to earlier periods. More numbers of small merchants chose to apply via contactless channels, which helped avoid long lines at lending institutions and prevent the spread of the virus.The hardship experienced by SMEs amid a persistent pandemic underscores the importance of having a strong and tightly-woven financial support system to help address their liquidity shortages. In this regard, the government has improved existing programs according the needs of the SMEs and middle market enterprises, thus responding to changing market conditions in a more flexible way. In terms of the COVID-19 P-CBO support, the government has decided to increase lending caps for companies and lower underwriting ratios for subordinated debt. These changes will begin to be applied with P-CBO issuances in October. In addition, the government has significantly improved the lending support program specifically targeted at the pandemic-hit SMEs and middle market enterprises on September 24, doubling lending caps, offering better interest rates and extending the support period.(HOUSEHOLD LOANS) In September, the growth of household loans from five major banks declined compared to the previous month. In particular, credit loans fell by about a half due to effective management by banks.
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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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Oct 05, 2020

FSC Holds Meeting on Cyber Security of Financial Institutions

FSC Chairman Eun Sung-soo held a meeting with relevant authorities to review the cyber security conditions of financial institutions on October 4.At the meeting, the authorities announced that financial institutions are maintaining strong preparedness for responding to cyberattacks amid a series of DDoS attack attempts by overseas hacking groups recently. In this regard, the Financial Security Institute will continue to work to strengthen cyber security measures while enhancing cooperation with other relevant institutions, including internet service providers and KISA.The authorities also reviewed risk factors related to the system outage that occurred at the Tokyo Stock Exchange on October 1. The FSC expects that it will have no direct impact on domestic financial transactions when markets resume after the Chuseok holiday. In this regard, the Korea Exchange, KOSCOM and securities companies will conduct a joint inspection to guarantee the safety of computer systems in domestic stock markets.* 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 24, 2020

FSC Holds 2nd Consultative Body Meeting on Digital Finance

Vice Chairman Sohn Byungdoo presided over the 2nd consultative body meeting on digital finance on September 24 and discussed the current status of platform businesses entering the financial sector and their impact on the market as well as ways to improve the personal authentication and identity verification system in financial services.The following is a summary of Vice Chairman Sohn’s remarks.(PROMOTING FAIR COMPETITION) With a growing number of platform businesses launching convenient financial services, it has brought positive changes for financial consumers but also raised concerns about their impact on traditional financial companies. As such, it is important to create an environment where fair competition takes place between the newly entering platform businesses and the traditional financial institutions. With the aim of establishing a sound market order for both platform service providers and financial companies, the government will (i) work to set up rules that will ensure transparency, fairness and accountability from service providers, (ii) expedite discussions on data sharing among market participants while focusing on the importance of ‘informed consent’ and data privacy rights and (iii) draw up plans to level the playing field between platform service providers and traditional financial companies.(PERSONAL AUTHENTICATION AND ID VERIFICATION) In order to promote the application of innovative technologies in the personal authentication and identity verification system in financial services, the government will (i) lay foundations for the application of diverse types of innovative personal authentication and ID verification technologies, (ii) strengthen requirements for data safety and security in financial transactions and (iii) clarify the division of responsibilities between financial companies and service users during the authentication and ID verification process.The government expects that close communication and discussions between market reg
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Sep 24, 2020

FSC Adds 5 More 'Innovative Financial Services' to Regulatory Sandbox

The FSC added five more 'innovative financial services' to the regulatory sandbox on September 23, bringing the total number of designated services to 115 since the sandbox program was first launched on April 1, 2019.Five credit card companies (Shinhan Card, KEB Hana Card, Woori Card, KB Kookmin Card and Lotte Card) will be granted regulatory exemptions to provide small-sum overseas remittance services for non-residents or foreigners.The service is expected to be launched after March 2021. The government expects that the newly available service will improve consumer access to low-cost overseas money transfer services while promoting competition and innovation in the industry.* Please refer to the attached PDF for details.
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Sep 23, 2020

KRW1.5 Trillion in Special Guarantees for SMEs Made Available by 4th Supplementary Budget

The FSC announced the availability of KRW1.5 trillion more in special guarantees for SMEs suffering from pandemic-induced economic downturn as the National Assembly passed the 4th supplementary budget.The special guarantee program run by Korea Credit Guarantee Fund will offer the same level of benefits as the first round support—up to 95 percent guarantee products with discounted fee rates (0.3%p, maximum 1.0%) for up to KRW300 million—and provide an expedited application review process to ensure swift provision of support. SMEs hit by COVID-19 related economic downturn may apply.The government will work to ensure a seamless implementation of the extra budget to help businesses get through the crisis.* Please refer to the attached PDF for details.
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Sep 23, 2020

Vice Chairman Pledges to Stay Alert for Potential Risks in Financial Markets

Vice Chairman Sohn Byungdoo held the 22nd financial risk assessment meeting via teleconference on September 23 and discussed market conditions and issues concerning household loans, soundness of financial institutions and corporate credit situation with relevant authorities.The following is a summary of Vice Chairman Sohn’s remarks.(FINANCIAL MARKET CONDITIONS) The corporate bond and short-term money markets showing signs of liquidity crunch at the end of March have largely improved due to prompt market stabilization measures taken by the government. Market experts forecast that the current stability will continue throughout the end of September given sufficient liquidity in the market. However, as there are potential risks related to COVID-19, relevant authorities should continue to closely monitor markets. The financial authorities will work to prevent an end-of-quarter credit crunch through various market stabilization measures already put in place.With regard to stock market conditions, there are possibilities of rising volatility given uncertainties surrounding the US presidential election, US-China relations, etc. There are also concerns about a growing number of retail investors taking out loans to invest in stocks including in overseas stock markets where there may not be adequate information available to them. As such, retail investors should be well aware of the risks involved in overseas stock investment, and financial institutions should make sure that investor protection measures are closely being observed in this regard.(HOUSEHOLD LOANS) The recent spike in household loans was caused in part by rising demand for loans by those undergoing difficult situations. However, a recent trend reveals that high income earners with high credit scores are increasingly turning to credit-based loans. As such, lending institutions should closely review borrowers’ debt service capabilities and monitor concentration of excessive liquidity in property markets, etc.(S
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Sep 18, 2020

Civil Penalties to be Introduced on Unfair Trading Activities

The government seeks to introduce penalties on unfair trading activities of up to twice the amount of undue profits generated by engaging in unfair trading activities as a relevant revision bill to the Financial Investment Services and Capital Markets Act was proposed at the National Assembly.Under the current legal system, the acts of unfair trading activities, such as the use of undisclosed information, price fixing or unjust trading, are punishable via the criminal law system, which often takes a long time to prosecute due to a higher degree of burden of proof applied. As such, the proposed revision to introduce civil penalties will help with more prompt sanctions on unfair trading activities and improve market discipline in capital markets.KEY DETAILSThe proposed revision bill establishes a legal ground to impose penalties on undue profits made from engaging in unfair trading practices for up to twice the amount of undue profits gained. In the case that calculating such amount of undue profits is inappropriate, a penalty of up to KRW5 billion may be imposed.In terms of the process, the FSC will be able to charge penalties upon receiving investigation results from the Prosecution Service or in consultation with the Prosecution Service.The new civil penalty will be operated in close tandem with the existing criminal penalty system and thus avoid imposing penalties at excessive levels.The revision proposal also stipulates that the Prosecution Service may provide relevant documents concerning investigation upon request from the FSC.SCHEDULEThe revision bill is currently pending at the National Assembly for a legislative process. The government will support the enactment of the proposed bill.* 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 15, 2020

Government Announces Improvements to Emergency Loan Program for Small Merchants

Vice Chairman Sohn Byungdoo presided over the 21st financial risk assessment meeting via teleconference on September 15, and discussed COVID-19 emergency support measures and follow-up plans for the Korean New Deal fund.The following is a summary of Vice Chairman Sohn’s remarks.(EMERGENCY SUPPORT) The government announced last Thursday its plans to make available a new round of emergency support for small merchants and SMEs to help them with the impact of the COVID-19 resurgence. The first round emergency loan program for small merchants provided support to about 540,000 businesses. With regard to the second round emergency loan program for small merchants, the government will double the individual loan cap from KRW10 million to KRW20 million and allow first round support recipients to be eligible for second round emergency loans as well. Accordingly, the first round support recipients within KRW30 million may apply for second round emergency loans starting from September 23. For SMEs, the government will make available KRW2.5 trillion in additional lending support through preferential credit loans and expand P-CBO issuance available for each business entity and sector.Local banks and the Korea Credit Guarantee Fund should take measures to ensure that their IT systems are ready for processing changes in the second round emergency loan program for small merchants, which will take effect from September 23. With approximately 500,000 small merchants expected to be eligible for this program, lending institutions should also focus on virus prevention measures.(K-NEW DEAL FUND) The government will work on follow-up measures for the launching of the Korean New Deal fund. To this end, a working group will be set up this week led by the Korea Development Bank and Korea Growth Investment Corporation to come up with operational guidelines and specific plans. Within September, the government will establish a guideline for K-New Deal investment, which will specifically designa
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Sep 10, 2020

FSC Holds 1st Consultative Body Meeting on Digital Finance

The FSC launched a public-private joint consultative body on digital finance, composed of leaders and experts representing financial sectors, big techs, fintechs and major financial labor unions, and held a kick-off meeting on digital finance via teleconference on September 10.The joint consultative body has been set up to tackle diverse challenges arising from the era of digital finance and offer balanced perspectives and solutions. The consultative body will operate four thematic working groups on (i) big tech-fintech relations, (ii) rules and regulations, (iii) financial data security and (iv) financial consumer protection.During the meeting, Vice Chairman Sohn Byungdoo spoke about the need to (i) continue regulatory reforms to promote innovation in financial services, (ii) build a fair competition environment for market participants, (iii) ensure consumer safety in digital finance, (iv) review risk factors related to financial market stability and (v) evaluate the impact of digital transformation on the society as a whole.The participants agreed on the need to have ongoing discussions on how to further develop the traditional financial industry and to promote close cooperation and win-win strategy between financial enterprises and digital platform businesses including fintechs.The joint consultative body will hold meetings regularly throughout this year and make its findings available to the public.* 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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Sep 09, 2020

FSC Discusses Details of Consumer Credit Bill

The FSC held the 9th task force meeting on improving the personal debt management system on September 9, and unveiled key details of the Consumer Credit Bill, which include (i) promoting private sector driven debt adjustment process, (ii) mitigating excessive debt collection burdens and (iii) strengthening debtor protection measures. KEY PROVISIONSThe government’s proposal on Consumer Credit Bill will focus on establishing a delinquent debt management procedure and providing incentives to financial institutions to promote a virtuous cycle for both debtors and creditors.I. PROMOTE PRIVATE SECTOR DRIVEN DEBT ADJUSTMENT PROCESS► Provide delinquent debtors who face difficulties in repaying debts on their own the right to request debt adjustment from financial institutions► Require financial institutions to inform debtors of their right to request debt adjustment prior to taking steps toward debt collection while prohibiting financial institutions from pursuing debt collection upon such a request and having them offer a debt adjustment plan based on their own standards► Introduce debt adjustment mediation specializing businesses which will provide assistance to individual debtors during the debt adjustment processII. MITIGATE EXCESSIVE DEBT COLLECTION BURDENS► Prohibit overdue interest charge on the principal which has not yet reached maturity even in the events of default► Restrict interest hike on debts that are deemed uncollectable and transferred to a third party such as a debt collector and have creditor institutions to consider the possibility of debt recovery when drawing up and applying their own standards of extinctive prescription► Limit the number of debt collection calls while providing debtors with a right to request a restriction on debt collection calls and to file lawsuits for damageIII. STRENGTHEN DEBTOR PROTECTION MEASURES► Require original creditor institutions to evaluate how debt collection agencies treated debtors in the past and whe
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Sep 08, 2020

Vice Chairman Discusses COVID-19 Prevention in Financial Sector and Investment in K-New Deal

Vice Chairman Sohn Byungdoo presided over the 20th financial risk assessment meeting via teleconference on September 8, and discussed enhanced social distancing measures being implemented in the financial industry, the progress of the COVID-19 financial support and the newly introduced ‘Korean New Deal fund.’The following is a summary of Vice Chairman Sohn’s remarks.(COVID-19 PREVENTION) As the government decided to extend the period of enhanced social distancing rules for one more week, financial institutions should take all necessary measures to prevent the spread of COVID-19. Meanwhile, financial institutions should check their business continuity plans and ensure digital security and seamless operation of key functions in the financial system.(PROVISION OF STRONGER FINANCIAL SUPPORT) The heightened social distancing rules pose difficulties for many small merchants and SMEs. The government will continue to work on the provision of emergency lending support through its KRW175 trillion-plus pandemic relief programs. The government will work to improve the provision of the 2nd phase financial support program for small merchants by adjusting its lending cap. Financial institutions should also ensure a seamless provision of loan maturity extensions and deferment of interest payments for small merchants and SMEs in need. The government will also provide support for heavy rain and typhoon victims via one-stop financial support centers set up throughout affected regions.(MID- TO LONG-TERM PREPARATION) Aside from providing short-term financial reliefs to overcome the COVID-19 crisis, the government will also take forward-looking measures to manage risks in preparation for the future. Amid the pandemic economy, the volume of credit-based loans by households has increased significantly. As such, the government will continue to work on preemptive management of household debt. In this regard, the government has begun to look into the application of debt service ratio by
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Sep 03, 2020

Government Unveils Plans for Launching Korean New Deal Fund

The government announced its plans to create a ‘Korean New Deal fund’ and promote private sector investment in the New Deal projects on September 3.OVERVIEWThe Korean government introduced a KRW160 trillion New Deal initiative in July, which is aimed at transforming the economy for the future. Successful implementation of the New Deal projects requires not only public sector capital but also private sector investment. As such, the government decided on the plans to launch a ‘Korean New Deal fund’ in order to (i) provide strong funding support for the New Deal projects, (ii) help channel enhanced market liquidity to productive sectors and (iii) make profit sharing from the New Deal investment projects more widely available to the general public.The ‘Korean New Deal fund’ is made up of the following three key pillars.(a) Launching a KRW20 trillion public sector led New Deal fund(b) Promoting New Deal SOC investment funds(c) Boosting private sector investments in New Deal projectsKOREAN NEW DEAL FUND: 3 KEY PILLARSI. PUBLIC SECTOR LED NEW DEAL FUND(STRUCTURE) A KRW20 trillion fund will be created for 2021-2025.(a) Master fund (or Fund of Funds): KRW7 trillion will be funded by the government and policy banks over the next 5 years.(b) Feeder funds: KRW20 trillion will be raised through matching funds between public (35%) and private sector (65%) investments.(INCENTIVES) Investment risks are reduced as the public sector led master fund will absorb losses first through a subordinated investment position.(INVESTMENT TARGET) Specific guidelines on investment targets will be determined later to ensure investments in broad areas of new deal projects and relevant businesses through diverse investment methods, including equity investments and loans.(PROFIT SHARING) Provide the general public with investment opportunities in Korean New Deal protects through public offerings at lower risk.II. PROMOTE NEW DEAL SOC INVESTMENT FUNDS(STRUCTURE) Public sector-led New Deal
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Sep 02, 2020

78 Out of 237 P2P Lending Firms Found Eligible for Business Registration

The financial authorities announced on September 2 that 78 out of the current total of 237 P2P lending firms have filed proper audit reports on time to be eligible for business registration under the new P2P lending act, which came into effect on August 27. The 78 P2P lending firms that are eligible to apply for P2P lending business licenses should submit application and complete the registration process until August 26, 2021. Unregistered entities will be subject to penalties thereafter.The financial authorities will work to promote sound development of the P2P lending sector and ensure investor protection. The government will also strengthen the supervision and management of unfair and illegal sales activities in P2P lending.* Please refer to the attached PDF for details.
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Sep 01, 2020

Vice Chairman Stresses Importance of Both Virus Prevention and Effective Lending Support

Vice Chairman Sohn Byungdoo presided over the 19th financial risk assessment meeting via teleconference on September 1 to review market conditions and monitor the progress in implementing the COVID-19 financial support.The following is a summary of Vice Chairman Sohn’s remarks.(COVID-19 PREVENTION) The resurgence of COVID-19 poses risks to economic recovery as the enhanced social distancing rules put restrictions on economic activities. However, successful prevention is the most effective remedy for economic recovery. As such, the financial industry should focus on implementing preventive measures while continuing to maintain lending support for the businesses and households in need.Due to the stronger social distancing rules put in place until the end of this week, banks are operating on an hour shortened work hours and insurance companies are refraining from face-to-face sales practices. Despite these enhanced social distancing measures, financial institutions should ensure a continuity in service provision by following their own business continuity plans and through ‘untact’ channels. Financial infrastructures including trade and payment systems that are highly interconnected with each other need to be closely monitored to prevent a systemic risk. The government will work to improve the system of digital security in financial services to help financial companies more effectively respond to contingencies.(FINANCIAL SUPPORT) In response to the protracted pandemic situation, the government decided last week to extend the period of (i) the loan deferment of principal and interest payments, (ii) part of the temporary deregulatory measures and (iii) the ban on stock short sale. These measures are aimed at facilitating the financial sector to continue to maintain the role of supporting the real economy while preventing the spread of uncertainties in financial markets. The government’s emergency lending support for small merchants and for SMEs and middle market e
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