Press Releases - Financial Services Commission

Press Releases

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Dec 10, 2020

5th Digital Finance Meeting Unveils Plans to Improve Rules and Regulations

Vice Chairman Doh Kyu-sang held the 5th consultative body meeting on digital finance on December 10 and discussed ways to improve rules and regulations for an ‘upward leveling’ of financial regulations for financial institutions, fintechs and big techs alike, which will promote competition and innovation for all.VICE CHAIRMAN’S REMARKSAmid significant changes taking place in the financial industry, fintechs are growing rapidly, big techs are entering financial markets and traditional financial institutions are actively pursuing digital innovation. In this process, the existing regulatory regime has not been able to sufficiently take into account the changing digital environment. There also have been concerns about the lack of fair competition and the need to apply same regulations for same functions. As such, the competition has become fiercer with growing uncertainties about the future.To promote communication and cooperation between different market players, the consultative body meeting on digital finance was established on September 10. A series of meetings with different market players since then helped to collect diverse opinions and suggestions. With the goal of ‘upward leveling’ of financial regulations for financial institutions, fintechs and big techs alike, the FSC has prepared plans to level the playing field and take into account the needs of different market players.KEY SUGGESTIONSA total of forty out of sixty-two suggestions (65%) have been accepted on the issue of regulatory arbitrage and digital transition, with fifteen others pending for mid- to long-term review.I. REGULATORY ARBITRAGE ISSUE- Expand opportunities for banks to operate platform business- Allow credit card companies to operate one-stop payment service business- Establish rules to oversee big techs’ platform sales activities- Allow financial companies to invest in and own shares of fintechs- Make data provision for MyData more equitable for banks and electronic financial bu
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Dec 09, 2020

FSC Will Continue to Ensure Convenient & Safe Certification Mechanisms in Financial Services

As the government announced the discontinuation of the public key certification system beginning on December 10, the FSC has prepared the following frequently asked questions to help financial consumers better understand the changes in their use of financial services.FREQUENTLY ASKED QUESTIONSQ) The public key certification system will be discontinued from December 10. Does that mean that financial transactions can be carried out without a certification?A) In principle, you still need a certification when required by a financial transaction. However, any type of certifications provided by private sector entities can be used in place of the current public key certification.Q) What happens to the existing public key certification when the discontinuation starts on December 10? Can I no longer use my public key certification to conduct financial transactions?A) Even after the discontinuation begins, you may still use your current public key certification to carry out various financial transactions.Q) Can I apply for the issuance of a new public key certification after December 10?A) Yes, you can still apply for the issuance of what will be newly termed the ‘common key certification.’Q) What types of certifications are available for the use in contactless financial transactions?A) There is the ‘common key certification’ issued by the Korea Financial Telecommunications Clearings Institute and KOSCOM, individual bank-issued certifications and certifications issued by telecom companies and platform businesses.Q) As of now, where and how can I get a private sector-issued certification?A) You can easily get it online by visiting websites of a commercial bank or a securities firm or on their mobile apps.Q) What are some of the upsides of the private sector-issued certification system?A) There is no need to download and install special software. You can use online cloud services to store your certification. Plus, biometric authentication and passcode identification off
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Dec 09, 2020

Government to Tighten Penalties on Illegal Stock Short Sale

The FSC announced the passage of a revision bill to the Financial Investment Services and Capital Markets Act at a plenary session of the National Assembly on December 9. The revision bill focuses on regulating illegal short sale activities including naked short sale to improve the accountability of domestic stock markets. The revision bill contains the following provisions.KEY PROVISIONS(A) IMPOSE PENALTY SURCHARGE AND CRIMINAL PENALTY ON ILLEGAL SHORT SALECurrently, illegal short sale activities are punishable with minor fines. To strengthen punishment, penalty surcharges will be imposed up to the amount of short orders as well as criminal penalties of a minimum one year of imprisonment or a fine of more than three times and up to five times the avoided loss amount. The introduction of strict monetary sanctions and criminal penalties will help prevent intentional attempts at illegal short sale while preventing investor errors and mistakes.(B) REQUIRE SHORT SELLERS TO KEEP RECORDS OF LOAN AGREEMENTS FOR FIVE YEARSShort sellers need to keep their securities lending agreements for five years and promptly submit them to the financial authorities when requested. This will help improve transparency and help financial authorities to more readily identify illegal short sale activities.(C) RESTRICT SHORT SELLERS’ PARTICIPATION IN EQUITY FINANCINGShort sellers will be prohibited from participating in equity financing of companies whose stocks they have shorted once the companies’ plans for equity financing have been disclosed. A penalty surcharge of up to KRW500 million will be imposed on violation of this provision.(D) STRENGTHEN REGULATION ON SHORT SALE BANThe temporary provision in the current enforcement decree that allows the authorities to prohibit stock short sale if it is deemed necessary to ensure the safety of stock markets and guarantee fair prices will be made permanent through this revision to the Act.FURTHER PLANSOnce the revision to the Financial Investme
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Dec 09, 2020

Household Loans, November 2020

The outstanding balance of household loans in all financial sectors rose KRW18.3 trillion from the previous month at the end of November 2020 (up 7.9% year-on-year). The household loan balance increased KRW13.6 trillion in the banking sector and KRW4.7 trillion in the non-banking sector.By type, mortgage loans increased KRW6.8 trillion in November, dropping KRW0.5 trillion from the previous month (up KRW7.3 trillion y-o-y). In the banking sector, mortgage loans expanded KRW6.2 trillion, down KRW0.6 trillion from the previous month, as jeonse loans grew at a slower rate. Mortgage lending by non-banks saw an increase of KRW0.6 trillion from the previous month. Other types of loans grew KRW11.5 trillion as credit-based lending by both banks and non-banks rose KRW7.4 trillion and KRW4.1 trillion, respectively, due to high demand for IPO deposits and front-loaded demand ahead of tougher regulations on credit lending.The government will continue to closely monitor trends in household loans and check the implementation of household debt management plan.* Please refer to the attached PDF for details.
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Dec 09, 2020

Improvements to Indemnity Health Insurance to be Introduced in July Next Year

The FSC announced the introduction of improvements to the current indemnity health insurance system beginning in July next year, which will help prevent moral hazard and lower premiums for the insured. The FSC expects that the improved structures will help ensure that indemnity health insurance plans can continue to provide important social safety nets alongside the state-operated national health insurance (NHI) service.BACKGROUNDIndemnity health insurance policies provide important social safety nets as they offer coverages to health care costs that are not covered by the NHI. As of the end of 2019, some 38 million individuals were covered by indemnity health insurance plans. When it was first introduced in 1999, the availability of fully covered plans guaranteeing no out-of-pocket expenses created moral hazard of excessive hospital visits and medical testing. Excessive use of health care services by a few has been pushing up premiums for others while insurers have seen a spike in loss ratios. A continuation of this trend in indemnity health insurance raises concerns about rising premiums and the sustainability of indemnity health insurance services. As such, the FSC has prepared the following measures to address these issues.KEY MEASURESI. LOWER PREMIUMS WHILE GUARANTEEING THE SAME LEVEL OF COVERAGE(COVERAGE) New indemnity health insurance policies will provide the same level of coverage as previously available on most types of illnesses and injuries with the maximum coverage of about KRW100 million for both in- and outpatient services. However, in order to prevent moral hazard of excessive and unnecessary use and provision of medical services, out-of-pocket expenses and deductions for outpatient services will be increased.(PREMIUM) Due to the increase in out-of-pocket expenses and outpatient deductions, insurance premiums will be significantly lower compared to the previous levels. Considering high levels of loss ratios, it is expected that premiums of newly avai
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Dec 09, 2020

Legal Grounds Established for Supervision of Non-holding Financial Groups

The FSC announced the establishment of new legal grounds for the supervision of non-holding financial groups as the new legislation was passed at a plenary session of the National Assembly on December 9.KEY PROVISIONS- NON-HOLDING FINANCIAL GROUPS: Have two or more subsidiaries operating financial businesses with total financial assets of KRW5 trillion or more.- INTERNAL RISK MANAGEMENT: An internal group-wide risk management body should be established led by the group’s top representative company to oversee the group-wide risk management policy, handle regulatory compliance, pursue prudential management, etc.- INTERNAL ASSESSMENT: Non-holding financial groups should conduct self-assessment on their capital adequacy requirements to maintain financial soundness while taking into account intra-group transactions and risk concentrations.- REPORTING DISCLOSURE REQUIREMENTS: Non-holding financial 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 request a submission of a management improvement plan if deemed necessary to prop up capital or reduce risky assets.The authorities expect that the new legislation on the supervision of non-holding financial groups will help foster a self-regulating risk management system for the regulated entities. The authorities will be able to more preemptively manage systemic risks in financial markets while minimizing the possibility of risk transfers and preventing damages to consumers and investors. In this regard, the government will continue to work for the advancement of both group-wide and systemic risk management schemes. * Please refer to the attached PDF for details.
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Dec 09, 2020

FSC to Work on Risk Management and Inclusive Finance

Vice Chairman Doh Kyu-sang held the 31st financial risk assessment meeting via teleconference on December 9 and discussed the year-end financing situation of businesses as well as the outlook for financial markets in 2021 and risk preparation. The following is a summary of Vice Chairman Doh’s remarks.(CURRENT MARKET SITUATION) Financial markets have been enduring difficulties presented by the protracted COVID-19 pandemic. The OECD projects Korea’s economic growth in 2020 to be the highest among its members and second to China among the G20 economies. KOSPI rose to a record high of 2,700 points on December 4 and KOSDAQ’s market capitalization is continuing to set new record highs. The corporate bond market also shows a smooth interplay between demand and supply with interest rates at stable levels. In terms of the recent surge in stock markets, some KRW60 trillion net buying by retail investors this year contributed most to the quick recovery of stock markets. In this regard, the government will continue to work for the fairness and transparency in stock markets and to foster trust from market participants.(ASSESSING RISK FACTORS) With the availability of vaccines in major economies, there are expectations for normalization. However, it may take a long time to reach a level of herd immunity given the time it takes for mass production and distribution of vaccines. Thus, excessive optimism should be cautioned against and various risk factors should be closely monitored. While many countries are maintaining expansive fiscal and monetary policies at unprecedented levels, BIS and IMF warned against the rise of asset prices detached from the real economy, concentration of liquidity and expansion of leverage. The rise of high-risk asset investments amid an ultra-low rate environment also poses a risk. The financial authorities will closely monitor these risk factors and respond promptly when necessary.The authorities will also keep a close eye on the business and hous
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