FSC works to ensure that finance plays a key role in developing innovative businesses and supporting the real economy, thereby fueling Korea’s more vibrant economic growth. Promoting advanced financial industry, stable financial markets, fair market order and reliable consumer protection are among FSC’s key policy agenda. Digital transformation and big data are increasingly playing larger roles in various aspects of financial services. In the era of 4th industrial revolution and digital economy, finance will help boost growth potential and create jobs as the government seeks to advance its Digital New Deal policy.
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Jan 19, 2016
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Jan 14, 2016
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Nov 01, 2015
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Oct 19, 2015
- FSC Roadmap for Insurance Business Reform
- BACKGROUNDKorea’s insurance industry has rapidly grown since 2000 to become the world’s eighth largest market with its total assets worth KRW 862 trillion, representing 19.8% of the Korean financial industry’s total assets, and 440,000 employees which account for 55.1% of the financial industry’s workforce. However, excessive ex-ante regulations on insurance policies and premiums stifled competition and innovation in insurance business, weakening the industry’s growth momentum. The FSC, therefore, outlined its plan to overhaul the regulatory framework on insurance business, which will be a remarkable reform initiative in 22 years since the insurance liberalization of 1993. Under the roadmap, the FSC will shift its regulatory focus from ex-ante regulations to ex-post supervision to promote price and service competition in insurance business, while strengthening the protection of policyholders and the financial soundness of insurance companies. MAJOR REFORMS1. GIVE INSURERS MORE AUTONOMY IN DEVELOPING INSURANCE PRODUCTS In principle, insurance companies will be no longer required to report their new products to the financial authorities prior to the sale, except for mandatory insurance and insurance products with new types of risk coverage. (Scheduled to be implemented in April 2016 after relevant regulations are amended) Standard insurance policies established by the financial authorities will be abolished to encourage insurers to develop more diverse insurance products. Necessary provisions such as protection of policy holders will be set out in relevant regulations. For indemnity and car insurance policies that need standardization, the industry association will be required to establish standard policies to report to the FSS. (Scheduled to be implemented in the second half of 2016 after consultations with the industry and amendments to relevant regulations) 2. REFORM PRICING REGULATIONS The liberalization of insurance premiums in 1993 allowed insurance co
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Jul 01, 2015
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Apr 23, 2015
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Mar 17, 2015
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Feb 26, 2015
- Korea's Household Debt and Policy Response
- 1. CURRENT STATUS OF KOREA’S HOUSEHOLD DEBTAs of end-September 2014, outstanding household credit totaled KRW 1,060.3 trillion with household loans totaling KRW 1,002.9 trillion and merchandise credit1 KRW 57.4 trillion.2The ratio of household debt to income in Korea was 160.7 % (as of 2013), higher than 115.1% in the US(as of 2012) and 135.7% of the OECD average(as of 2012). However, Korea’s household financial assets to liabilities ratio maintained stable levels of 46%, while the ratios in Spain and other major OECD countries have been rising.The quality of household mortgage loans has been improved with proportions of fixed-rate and fully-amortized loans steadily increasing. As of end-2014, the percentage of fixed-rate and amortized loans out of banks’ household mortgage loans stood at 23.6% and 26.5% respectively, exceeding 20% initially targeted by 2014.2. POLICY MEASURES TO MANAGE HOUSEHOLD DEBT GROWTHIt is a natural phenomenon that household debt increases as economy grows. The bottom line is that it is important to boost the economy while maintaining household debt soundness.Under such awareness, the government has been managing household debt with policy measures focused on two aspects. First, secure soundness of the financial system by maintaining the pace of household debt growth at manageable levels, improving the quality of household loans and bolstering financial institutions loss-absorbing capacity. Second, ensure financial soundness of households with measures to boost household incomes and provide tailored financial services to financially-vulnerable households.The government set basic policy directions to manage household debt with「Comprehensive Measures on Household Debt」in June 2011.The policy measures were focused on maintaining the pace of household loan growth at economic growth rates; improving the quality of household loans with a larger share of fixed- rate and amortizing loans; and providing tailored support for low-income househ
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Jan 29, 2015
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Jan 15, 2015
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Nov 26, 2014
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Oct 29, 2014
- Plan to Improve Financial Holding Company System
- BACKGROUNDKorea’s financial industry adopted financial holding company system in 2011 to maximize synergy among financial subsidiary companies. Since the introduction, financial holding companies have achieved notable growth and played a crucial role for the financial system. However, there are also skepticisms about the financial holding company system due to domestic financial holding companies’ low global competitiveness, asset and management structure centered by bank1, and instable governance structure.Nevertheless, financial holding company system is an effective mechanism to enhance financial industry’s competitiveness. The system creates synergies among subsidiary companies by preventing risk spillover to other financial companies2, easing MA and restructuring process, and enabling business connection among subsidiaries. Moreover, the financial holding company system enables subsidiary companies to provide one-stop financial services and expand business overseas which are expected to contribute to the development of the financial industry.To such backdrop, the Financial Services Commission plans to improve regulations and provide policy support to maximize effectiveness of the financial holding company system.DETAILED PLAN1. Ease regulations on holding concurrent positions by employees(Current) Global financial holding companies encourage heads of matrix organizations to hold concurrent positions to cover wider range of business strategy and operation. However, domestic financial holding companies have been applying strict regulations to employees related to holding multiple positions which makes them difficult to provide integrated financial services by collaborating business units.(After revision) The government will encourage financial holding companies to allow holding concurrent positions and ease related regulations. Possible negative impacts will be minimized through the Financial Supervisory Service’s stringent screening process. Positions th
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Jul 10, 2014
- FSC Announced Its Plan for Financial Regulatory Reform
- BACKGROUNDThe FSC announced its plan for financial regulatory reform to create new opportunities and growth drivers for Korea’s financial industry and economy.The global financial industry stands at a crossroads between decline in growth and another takeoff in the aftermath of the global financial crisis. Korea’s financial industry also has difficulties in seeking for clear vision, developing new profit models, and restoring public trust in the financial sector. The financial sector is now called for reinventing itself to support the real economy, to generate high-added value, and to bring more satisfactory services to financial consumers.The FSC identified both statutory and implicit regulations which constrained the growth of the financial industry. Since March 2014, we held dozens of meetings with stakeholders – e.g. financial institutions, consumers, etc. – and conducted a survey of stakeholders to get their views on existing regulations and recommendations for improvement. We also conducted a series of reviews on a total of 3,100 financial regulations, 1,700 regulations of which were shortlisted for further reviews. Out of them, 700 regulations were finally chosen to be reformed.KEY DIRECTION FOR FINANCIAL REGULATORY REFORM1. Build a financial regulatory system for ‘better regulation’A two-track approach will be taken for financial regulatory system: 1) a rule-based approach for regulations needed to maintain systemic stability, protect financial consumers, and ensure personal data security; and 2) a principle-based approach for regulations on approving financial institution s’ entrance into business, sales channel and business operation.2. Strengthen support for the real economy and reduce financial consumers’ inconvenienceRegulations on corporate lending, guarantee, and listing will be improved to facilitate the technology credit bureau(TCB) system. For financial consumers, excessive document requirement will be eased to enhance access to fina
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Apr 18, 2014
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Feb 20, 2014
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Nov 27, 2013
- Plan to Strengthen Competitiveness of Korea's Financial Industry
- The FSC announced its ‘Plan to Strengthen Competitiveness of Korea’s Financial Industry’ or the so-called ‘10-10 Value-Up Plan’ aimed at raising the added value that the financial industry generates up to 10% of the GDP over the next 10 years.BACKGROUNDThe financial industry greatly contributed to Korea’s rapid economic growth. Since the global financial crisis in 2008, however, Korea’s financial industry has lost its growth momentum and vitality. Moreover, repeated security incidents and fraud scandals in the financial sector significantly undermined financial consumers’ confidence in the industry.At the same time, the financial industry faces new challenges as Korea’s economy is shifting to slower growth, searching for a new growth model based on innovative technology and creative ideas. The population is also rapidly aging. Faced with such paradigm-shifting changes, it is time for both the government and the financial industry to seek new growth drivers.The FSC proposed the ‘10-10 value-up’ as a vision for Korea’s financial industry for the first time when Chairman Shin Je-Yoon met CEOs of financial holding companies in May this year. For the last six months since then, the FSC held 68 meetings with those in the financial industry to gather their opinions.Based on such a bottom-up approach, the FSC drew up the ’10-10 value-up’ plan focused on its feasibility. As a rolling plan, the ‘10-10 value-up plan’ will continue to be reviewed and updated on a regular basis in order to respond to market developments in a timely and flexible manner. OVERVIEWThe ‘10-10 value-up’ plan is to provide a blueprint for the financial industry’s development. The financial industry will be developed into a high value-added service sector as a new growth driver and generate decent jobs. To this end, the plan set three missions and nine objectives.KEY CONTENTS1. Promote competition and innovation in the financial sectorRegulatory barriers will be sig
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Aug 27, 2013
- Plan to Reshape Roles of Policy Banks
- The FSC announced its plan to reshape policy banks in order to streamline their overlapping functions and reinforce their policy financing roles for start-ups SMEs, new growth industries and overseas projects.MERGER OF KDB WITH KOFCThe Korea Finance Corporation (KoFC)1 will be re-merged with KDB, while its overseas assets worth KRW 2 trillion will be transferred to the Export-Import Bank of Korea (Korea Eximbank).KDB Financial Group Inc. will be merged with KDB, while its subsidiary units2 will be put up for sale. The timing and method of selling KDB subsidiaries will be determined later depending on market demands and conditions.The government will maintain its controlling stake3 in KDB, while portions of minority stake could be divested through an initial public offering (IPO).KDB will continue to offer retail banking services of the current level for the time being to minimize customers’ inconvenience but gradually reduce its retail banking business. KDB will no longer open new branches or attract deposits for retail banking service.The KoFC, KDB Financial Group Inc., and KDB are entities consolidated in financial statements; therefore, the merger will have an insignificant impact on BIS ratios of KDB.4The revision bill on the KDB Act will be submitted to the National Assembly forparliamentary approval this year so that the consolidated KDB could be launched in July 2014.POLICY FINANCING FOR EXPORTERS OVERSEAS PROJECTSKorea Eximbank and the Korea Trade Insurance Corporation (or ‘K-sure’) will continue to provide loan guarantees for exporters and finance overseas projects under the current framework with focus on their core functions.Non-core businesses of Korea Eximbank and K-sure will be gradually curtailed. In principle, K-sure will stop providing guarantees for loans extended by policy banks such as KDB, Korea Eximbank, and the KoFC. Korea Eximbank will gradually reduce its short-term loans5 up to less than 40% until 2017.Short-term export insurance busi
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Aug 20, 2013
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Aug 01, 2013
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Jul 23, 2013
