Press Releases - Financial Services Commission

Press Releases

Period: start
~
end

1month 3month Reset

Requirement

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.
Attachment 1
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.
Attachment 1
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.
Attachment 1
Aug 25, 2020

New Bill on Supervision of Financial Conglomerates Moves ahead for Enactment

The government approved the bill on the supervision of financial conglomerates during a cabinet meeting on August 25, which will be submitted to the National Assembly for enactment at the end of August.KEY PROVISIONSThe proposed bill on the supervision of financial conglomerates provides a legal ground for the supervision of non-holding financial groups with financial assets of KRW5 trillion or above and contains the following key regulations.► FINANCIAL GROUPS: Financial groups are defined as those with financial assets in the amount of KRW5 trillion or more, except financial holding companies and state-owned banks.► INTERNAL RISK MANAGEMENT: An internal group-wide risk management body should be established and operated, led by the group’s top representative company to oversee the group-wide risk management policy, regulatory compliance, prudential management, etc.► INTERNAL ASSESSMENT: Financial conglomerates should conduct self-assessment on the capital adequacy to maintain their financial soundness while taking into account intra-group transactions and risk concentrations.► REPORTING DISCLOSURE REQUIREMENTS: The group’s top representative company is required to report and disclose the group-wide capital adequacy status and risk factors to the FSC, which in turn may ask for a management improvement plan if deemed necessary to prop up capital or reduce risky assets.* Please refer to the attached PDF for details.
Attachment 1
Aug 12, 2020

Household Loans, July 2020

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

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

The FSC announced its decision to approve BC Card and Woori Bank’s holding of 34 percent and 19.9 percent stake each in K Bank on July 22.Under the Special Act on Internet-only Banks, non-financial companies including ICT firms are permitted to hold a maximum of 34 percent of shares with voting rights.* Please refer to the attached PDF for details.
Attachment 1
Jul 16, 2020

FSC to Work on Enhancing Transparency in Financial Regulatory Environment

FSC Chairman Eun Sung-soo presided over the 43rd financial hubs establishment committee meeting on July 16, and discussed ways to reassess the government’s financial hub policy following recent changes in market environments at home and abroad.The following is a summary of Chairman Eun’s remarks.The competition over the status of regional financial center in Asia has been accelerating. The Korean government has been pursuing its financial hub policy since it first unveiled the strategy in 2003 to turn Korea into a financial hub in Northeast Asia. However, due to increasing uncertainties in the global financial markets, financial companies have been reducing the number of overseas branches, and it has become more difficult to attract foreign based financial companies in Korea.Despite difficulties, it is important to regroup strategies based on the strength of our financial industry and renew our efforts. In this regard, the rising demand for asset management and growth in foreign investment continue to accelerate the globalization of the asset management industry. In addition, the rising demand for development finance in neighboring countries provides new opportunities for Korea through the government’s new northern and southern economic cooperation initiatives.Compared to other major financial centers in Asia, high corporate and income tax rates, lack of flexibility in labor markets and that of transparency in financial regulations have been pointed out as obstacles for Korea in becoming a major financial center in the region. From the perspective of macroeconomic management, the government’s capacity to change its tax or employment rules just for the purpose of advancing its financial hub policy will be limited. In the meantime, the government will work to enhance transparency in our regulatory environment and find innovative ways to improve competitiveness of our financial industry.* Please refer to the attached PDF for details.
Attachment 1
Jul 14, 2020

Government to Introduce Personal Credit Rating System Using NPS Contributions Data

The FSC and the Ministry of Health and Welfare announced on July 14 that an improvement to the personal credit rating scheme using information about individuals’ national pension contribution payments will be made available in October this year.The government has worked on improving the personal credit rating system using nonfinancial data, such as information about individuals’ contributions toward national pension and health insurance, along with the National Pension Service (NPS) and Korea Credit Bureau (KCB).In December 2019, the FSC designated Korea Credit Bureau’s data analysis service using homomorphic encryption technology as an ‘innovative financial service’ to be included in the regulatory sandbox program, which allowed data convergence between KCB’s credit data and NPS’ contributions data while paving the way for developing an improved credit rating model.Taking into account research findings that show a positive correlation between diligent contribution payments to national pension and low probability of loan defaults, the improved personal credit rating system will offer additional points to personal credit scores for the period of diligent contribution payments.As the improved credit rating system will go into effect in October this year, national pension subscribers are eligible to receive maximum 41 additional points for their credit scores. Up to 550,000 KCB-registered national pension subscribers are expected to see their credit scores go up. In particular, recent graduates and young adults who have thin credit records will benefit from this system.It also marks the first time application of homomorphic encryption technology in the world.* Please refer to the attached PDF for details.
Attachment 1
Jul 09, 2020

Household Loans, June 2020

The outstanding balance of household loans in all financial sectors rose KRW8.5 trillion from the previous month in June 2020 (up 5.4% year-on-year).By type, mortgage loans increased KRW5.1 trillion in June (up KRW2.4 trillion year-on-year). Regular mortgage loans, jeonse loans and group lending expanded KRW5.0 trillion in the banking sector, while non-banks saw an increase of KRW20 billion. Other types of loans showed an increase of KRW3.5 trillion (up KRW1.1 trillion year-on-year) as the demand for credit loans went up.The government will closely monitor rising demand for credit loans while continuing to work on the stable management of household debt.* Please refer to the attached PDF for details.
Attachment 1
Jun 30, 2020

FSC Issues Suspension of Business Operation for Optimus Asset Management

The FSC decided to issue suspension of business operation for Optimus Asset Management on June 30 in order to protect investors and prevent vacuum in the fund management and operation amid recent disruptions due to ongoing probes related to alleged frauds.The suspension will be from June 30, 2020 until December 29, 2020, and Optimus Asset Management will be prohibited from engaging in collective investment business and other relevant businesses other than those considered to be necessary for investor protection or recognized by the financial authority.During the suspension period, the company executives will be removed from their duties and the designated administrators will take over their duties.* Please refer to the attached PDF for details.
Attachment 1
Jun 10, 2020

Houshold Loans, May 2020

The outstanding balance of household loans in all financial sectors rose KRW3.6 trillion from the previous month in May 2020 (up 5.2% year-on-year).By type, mortgage loans increased KRW3.7 trillion in May (up KRW1.9 trillion year-on-year). Regular mortgage loans, jeonse loans and group lending expanded KRW3.9 trillion in the banking sector, while non-banks saw a drop of KRW200 billion. Other types of loans fell KRW30 billion (down KRW4.0 trillion year-on-year) due to a drop in credit card loans and policy loans.The government will continue to closely monitor trends in household loans amid the COVID-19 pandemic.* Please refer to the attached PDF for details.
Attachment 1
Jun 08, 2020

FSC Unveils New Bill on Supervision of Financial Conglomerates

The FSC unveiled a new bill on the supervision of financial conglomerates on June 5, which lays legal grounds for the supervision of non-holding financial groups that have financial assets of KRW5 trillion or more. It also contains provisions that authorize the FSC to demand a management improvement plan to help improve their financial soundness. The proposed bill will be submitted to the National Assembly in September this year.BACKGROUNDThe supervision of financial conglomerates is an internationally adopted regulatory mechanism implemented by major economies since the Joint Forum first introduced the principles for supervision of financial conglomerates in 1999. In Korea, financial holding companies have been subject to supervision through the Financial Holding Companies Act. However, there exist regulatory blind spots for non-holding financial groups despite their significance to the system. The IMF’s Financial Sector Assessment Program in April this year pointed out this problem and recommended that legislation on the supervision of systemically important non-holding groups is necessary to help remove the regulatory discrepancy existing between the holding and non-holding groups.As a key policy task of the current administration, the FSC introduced best practice guidelines for comprehensive supervision of financial conglomerates in July 2018, through which the authorities have been able to test run the comprehensive supervisory framework before an enactment of the relevant law.KEY PROVISIONSThe proposed bill on the supervision of financial conglomerates takes into account the current best practice guidelines, comments received during the test run period, research outcomes and the compatibility with the international standards.► FINANCIAL GROUPS: Financial groups are defined as those with financial assets in the amount of KRW5 trillion or more, except financial holding companies and state-owned banks.► INTERNAL RISK MANAGEMENT: An internal group-wide risk
Attachment 1
Jun 05, 2020

Vice Chairman Vows Strong Support to Educate More Professionals in Digital Finance

The FSC, the Seoul Metropolitan Government and the Korea Advanced Institute of Science and Technology (KAIST) signed a memorandum of understanding for launching digital finance educational programs to help cultivate more experts in the field on June 5.Vice Chairman Sohn Byungdoo delivered congratulatory remarks at the MOU signing event and vowed to provide strong support to help educate more professionals equipped with the knowledge and expertise on the latest trends and technologies in digital finance.Vice Chairman Sohn stated that the COVID-19 has brought about more demand for ‘untact’ and ‘officeless’ services in the financial industry as well as in our daily lives, and emphasized on the importance of digital transformation and educating more talented professionals to make that happen.The MBA program in digital finance and non-degree professional programs will commence in September and August, respectively.* Please refer to the attached PDF for details.
Attachment 1
Jun 04, 2020

Financial Authorities Recommend Caution with P2P Loan Investment

The financial authorities advised investors to practice caution when investing in peer-to-peer lending products on June 4 due to a rise in P2P loan default rate and cases involving unfair and unlawful sales practices by some companies. Investors should make investment decisions with adequate understanding about the products and be well aware that P2P loan products are high-yield, high-return products with no principal guarantees.Investors should also note that an information asymmetry is highly likely between investors and P2P lending firms with investors often lacking information about the borrowers’ credit records, collateral values, repayment plans, etc.The Act on Online-linked Financing scheduled to take effect on August 27 contains a series of investor protection measures, and investors are recommended to take note of these measure. The financial authorities will continue to keep a close eye on P2P lending firms that engage in unfair sales or promotional practices. The authorities will strengthen site inspection and take stern measures when unlawful activities are suspected.* Please refer to the attached PDF for details.
Attachment 1
May 28, 2020

FSC Chairman Highlights Importance of Timing and Sufficient Provision of Support for Key Industries

FSC Chairman Eun Sung-soo delivered congratulatory remarks at a launch event of the key industry stabilization fund on May 28.Chairman Eun stated that swift measures taken by the government and the National Assembly made it possible for today’s launching of the KRW40 trillion key industry stabilization fund.With regard to the management of the fund, Chairman Eun spoke about the importance of timing and sufficient provision of support to the businesses in need in order to help protect jobs.To ensure an effective operation of the fund, Chairman Eun urged strong cooperation from banks and other relevant institutions.* Please refer to the attached PDF for details.
Attachment 1
May 28, 2020

Vice Chairman Holds Talks on Promoting Market-Based Corporate Restructuring

FSC Vice Chairman Sohn Byungdoo held talks on promoting more market-based approaches to corporate restructuring with relevant institutions and market experts on May 28.The following is a summary of Vice Chairman Sohn’s remarks.MARKET-BASED APPROACHES TO CORPORATE RESTRUCTURINGAmid the current pandemic-induced economic downturn, many businesses are facing difficulties. With a blurring boundary between liquidity risk and solvency risk, it appears that more and more companies will have to go through corporate restructuring. Meanwhile, the creditor banks face limited capability to support corporate restructuring due to uncertainties about future repayment prospects and burdens of securing additional reserves. Therefore, promoting market-based approaches to corporate restructuring is essential for eliminating this discrepancy.Due to the pandemic-related market uncertainties, companies are selling subsidiaries to bolster liquidity, and the role of experienced market players such as asset managers in the corporate restructuring and MA market is crucial in this regard.CORPORATE RESTRUCTURING FUNDAs of the end of April 2020, the corporate restructuring fund has invested about KRW700 billion in 16 companies since its launch in November 2018. The fund has provided support for business turnaround of twelve companies in the traditional manufacturing sectors, such as steel, shipbuilding and auto parts. The successful turnaround cases of KG Dongbu Steel and Sungdong Shipbuilding provide an important turning point for more market-based solutions to corporate restructuring.As such, the government plans to expand the size of the corporate restructuring fund from KRW1.6 trillion to KRW2.6 trillion this year. With about KRW75 billion from fiscal resources, policy banks have helped to create a KRW500 billion master fund.(PROJECT FUND) With the increased size of the fund, the proportion of project fund will be expanded from 26 percent to 40 percent while making investment available for
Attachment 1
May 19, 2020

Vice Chairman Holds Meeting on Supervision of Financial Conglomerates

FSC Vice Chairman Sohn Byungdoo convened a consultative meeting on the supervision of financial conglomerates on May 19, and discussed specific plans for their group-wide risk assessment, disclosure and internal risk control systems.VICE CHAIRMAN’S REMARKSVice Chairman Sohn started out by stressing the significance of the consultative meeting, adding that the financial authorities should closely monitor recent volatility in the financial markets to prevent risk spillover to financial groups.On April 21, the IMF’s Financial Sector Assessment Program recommended that legislation on the supervision of financial groups is necessary to provide effective supervision on non-holding financial groups that are systemically important in Korea.With regard to the implementation of the measures to improve the supervision of financial conglomerates announced on February 24, the authorities will closely communicate with different stakeholders and experts to come up with appropriate indexing system that takes into account diverse risk factors for their group-wide risk assessment.IMPLEMENTATION PLANS(GROUP-WIDE RISK ASSESSMENT) Introduce within this year a group-wide risk assessment system which combines the currently distinct ‘risk concentration’ and ‘risk transfer’ categories into a single comprehensive framework for assessing capital adequacy requirements(GROUP-WIDE DISCLOSURE) Begin an integrated group-wide disclosure in September this year through which the six financial conglomerates will gather required information from their subsidiaries and provide group-wide disclosure of information on 8 sections and 25 categories, including ownership governance structure, internal risk management procedures, financial soundness, etc.(INTERNAL CONTROL SYSTEM) Work to introduce a group-wide internal control system in the second half of this year by having the six financial conglomerates establish and operate their own internal control councils and standards by the end of the thi
Attachment 1
May 19, 2020

Asia Region Funds Passport to be Launched on May 27

The government approved the revisions to the enforcement decree of the Financial Investment Services and Capital Markets Act on May 19 in preparation for the implementation of the Asia Region Funds Passport (ARFP) on May 27.KEY PROVISIONSThe revisions establish the following provisions for the registration and operation of passport funds.► REGISTRATION FOR PASSPORT FUNDS: Publicly offered local funds with (a) at least USD500 million in assets under management and USD1 million or more in capital, and (b) at least two board members with 5 years or more of management experience in the financial sector can apply to be registered as passport funds.Registered passport funds will be operated through securities and short-term financial instruments, sales of derivatives and securities lending agreement.► REDEMPTION DELAY AUDIT RULES: (a) A redemption delay is allowed when the amount of redemption requests surpasses 10 percent of the fund’s net asset value, (b) Small size funds (total assets of KRW30 billion or less) will be subject to an audit without exception► SALE REGISTRATION OF FOREIGN PASSPORT FUNDS: Foreign passport funds registered at another member economy will be available for sale in Korea through a streamlined process. Foreign passport funds sold in Korea will be subject to the same rules, regulations and investor protections as the publicly offered local funds.SCHEDULEThe revisions will become effective on May 27. The guidelines from the Korea Financial Investment Association and information about the registration process and relevant forms will be distributed to help facilitate the use of ARFP.* Please refer to the attached PDF for details.
Attachment 1
May 18, 2020

FSC Unveils 5th Plan for Financial Hub Policy

The FSC unveiled the 5th three-year plan for Korea’s financial hub policy (2020-2022) on May 15. The specific strategies include pursuing regulatory reforms to promote private sector-driven innovation, building infrastructure to continue innovative growth in the financial industry and adopting a ‘selection and concentration’ approach to build global capacity with a particular attention paid to the ASEAN markets.To accomplish these goals, the FSC adopted three key sectoral tasks—(a) supporting financial sectors that have comparative advantages, (b) developing financial infrastructure on a par with global standards and (c) providing effective support for financial hubs.Since 2008, the FSC has drawn up three-year plans for Korea’s financial hub policy, maintaining a consistent policy direction while effectively responding to rapid changes taking in the industry.KEY TASKSI. SUPPORT FINANCIAL SECTORS WITH COMPARATIVE ADVANTAGES(FINTECH INNOVATION) Foster the fintech industry through adequate funding support and creating a virtuous cycle between the financial regulatory sandbox program and regulatory reforms(ASSET MANAGEMENT MARKET) Promote pension fund management services and facilitate innovation in the asset management sector through improvements in regulations(PUBLIC FUNDS’ OVERSEAS INVESTMENT) Have the National Pension Service (NPS) and Korea Investment Corporation (KIC) boost their overseas investment as well as their contribution to the growth of the domestic asset management industry II. DEVELOP FINANCIAL INFRASTRUCTURE ON PAR WITH GLOBAL STANDARDS(DATA USE) Establish legal and institutional frameworks to promote a widespread use of big data in the financial industry(ANTI-MONEY LAUNDERING) Improve the regulatory framework on anti-money laundering scheme on a par with global standards and strengthen capacity to combat money laundering(FOREIGN EXCHANGE SYSTEM) Ensure smooth overseas transactions by improving user convenience in foreign exchange transacti
Attachment 1
May 12, 2020

Household Loans, April 2020

The outstanding balance of household loans in all financial sectors rose KRW2.8 trillion (up 5.4% year-on-year) at the end of April 2020. The household loan balance increased KRW4.9 trillion in the banking sector (up 9.2% year-on-year) while declining KRW2.1 trillion in the non-banking sector (down 0.8% year-on-year).By types, mortgage loans increased KRW4.7 trillion in April (up 5.8% year-on-year). Regular mortgage loans, jeonse loans and group lending expanded KRW4.9 trillion in the banking sector, while non-banks saw a drop of KRW200 billion due to the availability of refinancing products with lower interest mortgage loans. Other types of loans declined KRW2.0 trillion (up 4.8% year-on-year) due to a drop in credit lending.The government will closely monitor trends in household loans amid the ongoing COVID-19 pandemic.* Please refer to the attached PDF for details.
Attachment 1