Press Releases - Financial Services Commission

Press Releases

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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
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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.
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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.
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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.
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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
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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
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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.
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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
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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.
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May 04, 2020

FSC Selects Six SME-Specialized Investment Firms

The FSC has designated six securities firms as financial investment companies specialized in investing in small and medium-sized enterprises (SMEs)1: eBest Investment Securities, Eugene Investment Securities, IBK Securities, Kiwoom Securities, Korea Asset Investment Securities and SK Securities.The designation will be valid for two years starting from May 4, 2020. The designated firms will be granted policy incentives, such as preferential treatment in the selection process for state-backed fund managers or favorite terms in the provision of securities-backed loans, etc. They will be required to report their performance in SME financing to the financial authorities every six months. If their performance record in the semi-annual report is deemed insufficient twice in a row, the financial authorities may revoke the designation.The government will continue to work on supportive measures for SME-specialized investment companies to better serve financing needs of SMEs and start-ups.* Please refer to the attached PDF for details.
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May 01, 2020

FSC To Work on Improvements To Financial Education Programs

Vice Chairman Sohn Byungdoo presided over the first financial education council meeting on April 29, in which the council decided on the plans for improving financial education.BACKGROUNDA new legislation on financial consumer protection adopted by the government on March 17, 2020 establishes a legal foundation to provide financial education to consumers. Over the years, financial education has become more widely available in Korea as household debt levels increased and personal asset management became more important amid aging society and prolonged low interest rates.Against this backdrop, the FSC carried out surveys and focus group interviews last year to assess current situations, and the results revealed that despite wide availability of financial education, the quality of educational contents, delivery channels and instructors has been lagging. Thus, the council on financial education plans to work on improving the organization and effectiveness of financial education through an enhanced level of cooperation between the public and private sectors.PLANS FOR IMPROVING FINANCIAL EDUCATION► CONTENTS: a) Design a set of financial literacy indicators to help develop and manage educational contents in a more systematic way, b) Draw up plans for contents development every year to maintain the timeliness of the contents, c) Ensure credibility through a contents certification system► CONTENTS DELIVERY CHANNELS: a) Make sufficient class spaces available for financial education throughout the country, b) Set up an online one-stop contents site which offers answers to the finance-related questions in everyday life, c) Make educational contents available through different platforms based on the different needs of consumers► INSTRUCTORS: a) Work on establishing a more systematic management of professional instructors, b) Make training programs more widely available for school teachers► EDUCATIONAL METHODS: Promote diverse educational programs based on the needs of dif
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Apr 29, 2020

Accounting Day Designated by Law To Commemorate Importance of Transparency in Accounting

The amendment to the Act on External Audit of Stock Companies passed the National Assembly on April 29, which officially designates October 31 the accounting day for commemorating the value and importance of transparency and celebrating the work of accountants.Every year since 2018, an accounting day commemoration event was held on October 31, organized by the private sector associations and academia. With the revised law becoming effective one year after promulgation, the government will lead the organization of the accounting day commemoration event beginning in 2021.* Please refer to the attached PDF for details.
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Apr 29, 2020

Foreign Currency Asset Limits Raised for Insurance Companies

The revisions to the Insurance Business Act passed the National Assembly on April 29, which increase the cap on foreign currency assets for insurance businesses. The revisions will go into effect six months after promulgation.KEY REVISIONS► FOREIGN CURRENCY ASSET MANAGEMENT: The current cap on insurance companies’ management of foreign currency assets will be increased from 20~30 percent to 50 percent for both general and special accounts in order to grant more autonomy in asset management.► ADEQUATE UNDERSTANDING BY CONSUMERS: Under the current law, insurance policies are the only document subject to evaluation to see how well consumers understand the documents. The revised law will also include pre-contractual information package to ensure more adequate understanding of insurance policies by consumers.► PENALTY RULES: For the failure of notifying consumers the right to request a lowering of interest rates, the revised law will impose a fine on the insurance company, not on the board members of the company to make the penalty rules more equitable with those of savings banks and credit finance businesses.* Please refer to the attached PDF for details.
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Apr 22, 2020

Vice Chairman Calls for Enhanced Monitoring of Corporate Bond Markets by FSB

FSC Vice Chairman Sohn Byungdoo participated in the Financial Stability Board’s steering committee meeting via conference call on April 21. At the meeting, the members agreed that the early signs of widespread anxieties in the financial markets have diminished due to policy responses from each country. Meanwhile, they raised concerns about the potential rise in solvency risk due to continuing uncertainty.At the meeting, Vice Chairman Sohn stated that the volatility in the financial markets appears to have stabilized in April. In order to prepare for the possibility of a further economic downturn, the FSB needs to strengthen monitoring of the corporate bond markets and derivatives markets.In addition, banks should implement more flexible lending rules on a par with the governments’ efforts at regulatory flexibility. However, lowering regulatory standards risks regulatory fragmentation across jurisdictions, which raises the possibility of regulatory arbitrage and threatens financial stability. In this regard, Vice Chairman Sohn suggested that the FSB and the international standard setting institutions should provide guidelines on the appropriate levels of regulatory flexibility.* Please refer to the attached PDF for details.
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Apr 17, 2020

FATF Report Finds Korea Has Strong Legal Framework for AML/CFT Regime

The Financial Action Task Force published the 4th round mutual evaluation report on Korea’s anti-money laundering and counter terrorist financing (AML/CFT) regime on April 16. The mutual evaluation report finds that “Korea has a sound legal framework to tackle money laundering and terrorist financing and to confiscate funds involved,” and “has significantly strengthened its AML/CFT framework which is now delivering good results.” The mutual evaluation process began in January 2019 with a field visit for due diligence taking place in July last year. After a six-month cooperation, the mutual evaluation report was adopted during the FATF plenary meeting in February 2020.* Please refer to the attached PDF for details.
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Apr 16, 2020

FSC Approves Revised Rules on Misconduct in Financial Services

The FSC decided to adopt the revised rules and regulations for the examination and sanctions on financial institutions on April 16 as a follow-up measure to the plans to improve the rules on exemption for misconduct in financial services announced in the previous week.RULES ON EXEMPTION FROM SANCTIONS The revisions are intended to guarantee exemptions from sanctions for financial services workers, and by doing so, to help encourage them to play a more active role in offering loans and other financial support to the businesses and individuals in need during the COVID-19 pandemic as well as in other crisis situations.The revised rules and regulations include an ex ante provision to ensure that the exemption from sanctions will be applied to the possible misselling or misconduct cases that have occurred prior to the adoption of these changes.REQUEST FOR REGULATORY INTERPRETATION AND NO-ACTION LETTERThe FSC also decided to allow financial institutions to anonymously submit requests for regulatory interpretation and no-action letter from April 16. Until now, financial institutions faced obstacles as they were only able to file requests with the company name and the name of the company representative.From April 16, financial institutions will be able to submit requests anonymously via online at http://better.fsc.go.kr and by providing only their contact information such as a telephone number and an email address.* Please refer to the attached PDF for details.
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Apr 10, 2020

Financial Regulators Issue Investor Alert on COVID-19 Related Stocks

The financial regulators issued an investor alert on April 10 on a set of 69 stock items related to COVID-19 including masks, test kits, vaccines and other sanitary and disease prevention items due to high fluctuations in prices and concerns over possible damages to investors.Investors are advised to be aware of the possibility of incurring losses especially when investing in stocks for test kits or vaccines as their bullish prices tend to fall abruptly.Investors should also watch out for unconfirmed information about the development schedule of vaccines or the effectiveness of similar medicines circulating on the stock market bulletin boards, the internet or through text messaging system.The financial authorities will strengthen the market monitoring and supervisory functions to prevent unfair trading practices in the capital markets, such as the spread of false information and/or exaggerated announcement of business plans.* Please refer to the attached PDF for details.
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Apr 08, 2020

Household Loans, March 2020

The outstanding balance of household loans in all financial sectors rose KRW9.1 trillion (up 5.6% year-on-year) at the end of March 2020.By types, mortgage loans increased KRW5.2 trillion in March (up 5.5% year-on-year). Regular mortgage loans, jeonse loans and group lending expanded KRW6.3 trillion in the banking sector, while non-banks saw a drop of KRW1 trillion due to the availability of refinancing products with lower interest mortgage loans. Other types of loans rose KRW3.9 trillion (up 5.6% year-on-year) due to a rise in credit lending.The government will closely monitor trends in household loans as the outstanding balance of household loans by financial institutions is expected to increase in April due to a rising demand for loans amid the COVID-19 pandemic.* Please refer to the attached PDF for details.
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Mar 31, 2020

Vice Chairman Speaks on Importance of Removing Information Barriers for Policy Cooperation

FSC Vice Chairman Sohn Byungdoo attended the Financial Stability Board’s first plenary meeting this year via a conference call on March 30. During the meeting, the members discussed their policy responses to the COVID-19 outbreak as well as adjustment to the FSB’s work priorities for this year.In order to restore stability in the global financial markets, Vice Chairman Sohn emphasized that international cooperation has now become more important than ever. To that end, the Vice Chairman spoke about the need to remove information barriers that currently exist between the FSB standing committees in order to establish a more effective framework for policy cooperation. Vice Chairman Sohn also underscored the need for international standard setting bodies, such as the Basel Committee on Banking Supervision, to establish certain guidelines to promote regulatory flexibility.* Please refer to the attached PDF for details.
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Mar 30, 2020

Peer-To-Peer Lending Cap to be Lowered to Provide Investor Safeguards

The FSC and the FSS announced on March 27 their decision to lower the peer-to-peer lending cap through supervisory guidance from the previously set amount of KRW50 million to KRW30 million per year. For real estate investment products, the P2P lending cap will be lowered to KRW10 million from KRW30 million.The decision was made amid growing concerns about damages to investors due to the possibility of an increase in defaults and delinquencies in the wake of the COVID-19 crisis.The changes in the lending cap apply to retail investors and take into consideration public comments since the enforcement decree of the Act on Online-linked Financing was announced on January 28.The government plans to gradually adjust the lending cap in the future, while promoting the sound development of the P2P lending industry and investor protection.* Please refer to the attached PDF for details.
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