Press Releases - Financial Services Commission

Press Releases

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Jul 22, 2022

Government and Financial Sectors to Work for Soft Landing of Business Loan Forbearance

The FSC and FSS along with major banks, financial industry associations and other relevant institutionsdecided to set up a consultative body to work together for a soft landing of the loan maturity extension and payment deferment programfor small merchants and SMEs and held its first meeting on July 22.Through consultative body meetings, authorities will work to prepare a close knit system of support for a soft landing of the maturity extension and payment deferment program in close connection with the governments financial sector measures to help stabilize peoples livelihoods announced on July 14. Background The FSC and financial holding companies held discussions on the implementation of the financial sector measures to help stabilize peoples livelihoods as well as the maturity extension and payment deferment measure at the meeting between the FSC Chairman and CEOs of financial holding firms held on July 21. At the meeting, the financial holding firms stated that financial institutions have been drawing up measures voluntarily in preparation for the termination of the maturity extension and payment deferment program. They indicated that financial institutions are providing one-on-one consulting service and rescheduling of debt payments to help borrowers who are currently on the loan forbearance program to make installment payments (for deferred principal and interest payments) according to their individual debt service capabilities.They explained that each financial institution is preparing its own plan for dealing with borrowers on a case-by-case basis. Nonetheless, in order to prevent potential confusion arising between financial institutions due to divergent situations of borrowers (e.g. debtors with multiple debt accounts), the CEOs of financial holding firms suggested that drawing up a joint guideline that is agreeable by both banks and nonbanks is needed to effectively deal with the areas that individual financial institutions alone cannot adequately address
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Jul 19, 2022

FSC Holds Kick-off Meeting on Financial Regulatory Reforms

The FSC launched a financial regulatory reform committee, composed of 17 private sector participants with expertise in economics, finance, digital, law, and media sectors, to push forward financial regulatory reform initiatives through a private-public cooperation. At its kick-off meetingheld on July 19, the committee appointed Bahk Byung-won, former honorary chairman of the Korea Enterprises Federation (KEF), as committee chairman and discussed directions for financial regulatory reforms. Summary of FSC Chairmans Opening Remarks In his opening remarks, FSC Chairman Kim Joo-hyun emphasized the need for financial regulatory reforms in response to the reshaping of the financial sector and technological changes caused by digital transformation and a blurring of the barriers across sectors (called a Big blur phenomenon). In order for the financial sector to play a key role in economic growth as an independent industry, Chairman Kim called for bold reforms of financial regulations. The financial regulatory reforms, he said, are aimed at creating a new playing field to produce a success story, like a globally-renowned K-pop group BTS, in Koreas finance, in which new players originating from Koreas financial sector would be leading global markets. With financial regulatory reforms, the government will (a) support financial companies, regardless of whether they are online or offline businesses, to grow into global players; (b) create an environment to promote digital innovation for both financial companies and big tech; and (c) allow domestic financial companies to enter businesses, in which global financial companies are allowed to operate. All existing regulations will be reexamined on a clean slate. Chairman Kim stressed the importance of working together principle with various stakeholders from different sectors including industries, academics and media, and asked the financial regulatory reform committee to examine and discuss financial regulatory reform proposals from
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Jul 14, 2022

FSC Unveils New Administration's Financial Sector Measures to Ensure Stability in People's Livelihoods

FSC Chairman Kim Joo-hyun announced the new administrations financial sector measures for ensuring stability in peoples living conditions on July 14. The measures were discussed at the 2nd emergency meeting for stabilizing peoples living conditions held by President Yoon Suk Yeol earlier on the same day. Financial Measures for Ensuring Stability in Peoples Living Conditions (Basic Direction) Strengthen efforts for providing financial supports through refinancing options, debt adjustment and emergency funds to help alleviate burdens on vulnerable groups such as small merchants, households, young adults and lower income earners facing difficulties amid rate hikes. I. Easing Financial Burdens on the Self-employed and Small Merchants Support the self-employed and small merchants recovery efforts by adjusting their debt payment burdens in line with their payment capabilities. a) Make a transition from the current system of financial rescue centered on payment deferments (since April 2020) to a system centered on making fundamental improvements to the financial structure focused on alleviating payment burdens ► (New Start Fund) Provide debt adjustment by purchasing some KRW30 trillion in bad debt (or at-risk debt) - Loan term (maximum 1~3 years), long-term installment payment (maximum 10~20 years), interest rate reduction - Principal reduction (60~90%) provided at a considerable rate to delinquent borrowers with overdue payments of 90 days or more ► (Refinancing Loan) Convert high interest rate loans (with interest rates of 7% or higher) to low interest rate loans (KRW8.7 trillion) ► (Funding for Business Operation) Funding support for business remodeling, reorganization or improvement (KRW42.2 trillion) b) Prepare a close-knit system of support for small merchants to ensure that there are no loopholes after the termination of the loan maturity extension and payment deferment program currently in place until the end of September 2022 ► Maximum loan term of one yea
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Jul 13, 2022

Authorities Introduce Measures to Stabilize Corporate Bond and CP Markets

The FSC announced preemptive market stability measures on July 13 to help stabilize corporate money markets amid rising volatility in the corporate bond and CP markets and financing difficulties exhibited by some businesses due to the impact of recent market rate increases. The Korea Development Bank (KDB) and Korea Credit Guarantee Fund (KODIT)s operation of the corporate bond and CP purchase programswill be extended until March 2023 and the maximum purchase cap will be expanded to KRW6 trillion. Corporate Bond and CP Market Assessment The FSC along with the Financial Supervisory Service, other relevant institutionsand market participants has been closely monitoringthe corporate bond and CP markets amid concerns over increasing volatility in the corporate bond and CP markets due to recent rate hikes. Current Situation in Corporate Bond and CP Markets Due to deteriorating conditions for issuing corporate debt amid expansions in interest rates and spreads, there have been concerns about a slowdown in the issuance of corporate debt and risk for refinancing particularly for low-rated and vulnerable businesses. I. Corporate BondMarket Situation (Issuance) In H1 2022, the amount of corporate bonds (for both non-financial and financial businesses) issued was KRW89.3 trillion, a decline from the same period in the previous year,and the trend for low-rated (non-investment grade) businesses (A-rating or lower) has been continuously declining since March. (Interest Rate and Spread) With acceleration in monetary tightening by major economies and continuing rate hikes by the Bank of Korea, the issuing rateshave increased and spreadshave expanded too. Especially, corporate bond spreads in general have recently gone up higher than the highest point recorded during the COVID-19 pandemic era (June 2020). (Refinancing Risk) Corporate bonds (non-financial businesses) maturing in H2 2022 amount to KRW15.4 trillion, which is the largest since 2017, and the proportion of non-investment
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Jul 12, 2022

Household Loans, June 2022

The outstanding balance of household loansacross all financial sectors rose KRW0.7 trillion in June 2022 with the pace of growth falling from the previous month (up KRW1.7 trillion).The trends in household loan continue to be on a stable path as the statistics for all financial sectors in H1 2022 fell (down KRW0.8 trillion) for the first time since the half-year statistics first became available in 2015.The financial authorities will continue to make efforts for a soft-landing of the household debt issue as there are possibilities of growing burdens on borrowers and risks to financial companies due to interest rate hikes. (Overall) Household loans in June 2022 increased KRW0.7 trillion across all financial sectors. The growth rate (up 2.7%, y-o-y), which fell back lower from a slight increase seen in the previous month, continued to stay on a downward path since the second half of 2021. (By Type) Mortgage loans grew at a faster rate compared with the previous month, but other types of loans dropped considerably to bring down the overall household loan growth level. - (Mortgage Loans) Mortgage-backed loans rose KRW2.8 trillion in June, growing at a faster rate from the previous month (up KRW1.5 trillion) due to brisk lending by banks and the mutual finance sector. - (Other Types of Loans) Other types of loans dropped KRW2.1 trillion in June, edging back lower from a temporary hike in the previous month as credit loans and non-housing collateral lending declined. (By Sector) Household loans in both the banking and non-banking sectors saw a slowdown in the growth level, but the downward trend seen throughout this year in the mutual finance sector has turned upward. -(Banking Sector) Banks saw an increase of KRW0.2 trillion in household loans, declining slightly from the previous month (up KRW0.3 trillion). Mortgage loans from banks rose KRW1.4 trillion,growing at a faster rate compared with the previous month (up KRW0.8 trillion), as jeonse loans (up KRW0.9 trillion) a
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Jul 07, 2022

Revised Rules on Credit Information Business to Enhance Convenience and Efficiency in Data Use

The FSC approved a revision proposal for the supervisory regulation of credit information business at its regular meeting held on July 6. The key revisions and improvements are aimed at facilitating data convergence and utilization between different industries as stated below. a) Allow data utilizing institutions (non-data holders) to make request for data convergence to enable businesses and institutions that are non-data holders to easily converge and utilize data held by other businesses and institutions that are data holders. b) Introduce a data convergence procedure on sample data that can be more efficient and safe for use as it extracts and uses a portion of data from a large data set. c) Make data specializing institutions requirements for self-convergence of data more reasonable to facilitate data convergence and utilization by data specializing institutions. d) Introduce a qualification verification system whereby the Financial Supervisory Service (FSS) will verify the qualification of data specializing institutions every three years to ensure the maintenance of expertise and security quality by these institutions. To make additional designation of data specializing institutions, on Monday, July 11, authorities will take applications for preliminary designation from the institutions that have earlier submitted preliminary applications in February. Overview In order to make finance play a leading role in a data economy through promotion of data convergence and utilization between the financial and other various industries, the FSC introduced a revision proposal for the supervisory regulation of credit information business in January 2022,and on July 6, the FSC approved this revision proposal which will go into effect from the date of announcement on July 7. In addition, to make additional designation of data specializing institutions,the FSC will accept applications for preliminary designation of data specializing institutions on Monday, July 11. As previou
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Jul 06, 2022

Interest Rate Disclosure System to be Improved for Protection of Consumer Rights and Interests

The FSC unveiled a set of measures to make improvements to the interest rate disclosure system in the banking sector on July 6. The measures are aimed at protecting the rights and interests of financial consumers and include the following. a) Making improvements to the disclosure of net interest spread (NIS) comparisons and on the disclosure of lending and deposit rates to make accurate and adequate information about interest rates available to consumers. b) Overhauling the rate calculation system to ensure that rate calculation is conducted in a reasonable and transparent way and bolstering the banking sectors self-inspection and internal control on rate calculation. c) Piloting online deposit products intermediary business, strengthening the requirement to explain personal credit assessment to consumers and having banks to disclose their performance on meeting consumers demand for interest rate reduction in order to promote interest rate competition between banks. Background With the normalization in monetary policy taking place across the globe and the Bank of Koreas base rate increase, rapidly rising market rates have pushed up lending rates and deposit rates in the banking sector. In particular, due to a considerable hike in lending rates to households, banks net interest spread (NIS) for the household sector has expandedand consumers are experiencing added burdens as a result. As there are possibilities of growing financial cost burdens on consumers in times of rate hikes, the authorities plan to seek following measures for improvement to expand interest rate disclosures and ensure rate calculation in a reasonable way. Key Details for Improvement I. Improving Interest Rate Disclosures to Bolster Information Accessibility for Financial Consumers a) Net interest spreads (NIS) of all banks will be disclosed in a comparative format (on the website of Korea Federation of Banks) and the disclosure cycle will be shortened from three months currently to one month. Sin
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Jul 04, 2022

FSC and FSS Decide to Implement Measures to Mitigate Stock Market Volatility

In response to a recent increase in stock market volatility, the financial authorities held a market monitoring meeting on July 1 and decided to take measures to mitigate market volatility. (a) Requirement for securities firms to maintain a certain level of collateral ratio on their credit loans will be exempted for three months starting from July 4, which may be extended if needed. (b) Caps on the amount of daily buy orders for acquisition of treasury stocks by listed companies will be eased for three months starting from July 7, which may be extended if needed. (c) The FSS and KRX will jointly conduct a special inspection on short-selling practices. Financial authorities will continue to monitor financial market conditions, holding a joint market monitoring meeting on a weekly basis, and consider or implement market volatility mitigation measures, if needed, in accordance with contingency plans. Background With the KOSPI falling below 2,300 points during intraday trading on July 1, Koreas stock market has shown continued and increasing volatilityon concerns over rising interest rates, expanding inflation, possibility of a global economic recession, etc. Although increased stock market volatility will be inevitable for a while, given macroeconomic conditions at home and abroad, it is necessary to stay alert about the spread of excessive market anxieties. Measures To Mitigate Stock Market Volatility The FSC and FSS held a joint market monitoring meeting with relevant securities institutionschaired by FSC Vice Chairman Kim So-young to examine financial market conditions after the market closing on July 1, and decided to implement the following measures to mitigate market volatility. (a) For three months from July 4 to September 30, which may be extended if needed, securities firms will be exempted from a requirementto maintain a certain level of collateral ratios on their credit loans in order to ease concerns about a surge in forced liquidation with declining stock
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Jun 29, 2022

One-stop Lost Credit Card Reporting Service Available from Account Info Mobile App from June 29

The FSC announced the availability of the one-stop integrated lost credit card reporting service from a mobile application called Account Info from June 29 through which financial consumers using credit cards from different issuers can simply access the app to submit lost reports at once. Background Along with the Credit Finance Association and the payment card industry, the FSC has been operating a one-stop integrated lost credit card reporting service to protect card users.As of now, the one-stop integrated lost credit card reporting service is available at credit card companies through their mobile apps or websites, and the total number of lost card reports reached some two million until the end of December 2021. To help accommodate such wide usage of the one-stop integrated lost credit card reporting service and to improve service access and convenience for financial consumers, the authorities have been working to expand the availability of one-stop integrated lost credit card reporting service to the Account Info mobile app. Key Details From June 29, the one-stop integrated lost credit card reporting service is available on the Account Info mobile app. Within the Account Info mobile appthat provides one-stop integrated search and management of a users all financial account and card information, a new One-stop Lost Card Report function will be added under the menu My cards at a glance. On the Account Info app, users can (a) check which cards they are currently using, (b) choose the cards they want to report as being lost and (c) submit a lost report. With the reduction in time and process for submitting lost reports, it is expected that this service will improve consumer convenience and help lower the amount of damages resulting from lost or stolen cards. Lost reports for credit, debit or family cards issued under the same name as the person filing the lost report can use this service (corporate cards excluded) and this service can be used from overseas as well.
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Jun 23, 2022

FSC Holds 2nd Financial Risk Taskforce Meeting

FSC Vice Chairman Kim So-young held the 2nd financial risk taskforce meeting on June 23 jointly with the other relevant institutions.The meeting discussed the following three issues(a) expanded operation of the emergency response review system,(b) preparing ten major financial risk response tasks and focusing review on these issues and (c) working on preemptive support measures to prevent default risk of financial companies. In his opening remarks, Vice Chairman Kim stated that volatility has been expanding in global financial markets and there are growing concerns about economic slowdown amid a prolonging war in Ukraine and an acceleration of monetary tightening in the U.S. and other major economies. As such, Vice Chairman Kim emphasized that it is necessary to more closely and comprehensively check market risks with a strong sense of urgency as if a complex crisis situation may surface anytime. In addition, Vice Chairman Kim said that while maintaining a daily financial market monitoring system, the authorities have strengthened the emergency response review system through an expanded operation of the financial risk response taskforce and that the authorities will carry out monitoring focused on ten major response tasks. Vice Chairman Kim said that the government will promptly implement the financial support programs to help with peoples living conditionsthat have been included in this years second supplementary budget.Along this line, in order to identify and alleviate the hardship experienced by vulnerable groups, Vice Chairman Kim said that the authorities will set up and operate a taskforce to help relieve financial difficulties of vulnerable groups and prepare specific support measures in advance. While reviewing the risk factors and the liquidity and soundness conditions across the financial system, Vice Chairman Kim talked about the need for a plan to manage excessive leverage of specialized credit finance companies as their high dependence on the issuance
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Jun 20, 2022

2022 Korea Fintech Week to be Held in September

The FSC announced that the 2022 Korea Fintech Week, a global fintech exhibition, will be held from September 28 to 30 this year in cooperation with relevant institutions. With the availability of both offline and online participation, the Korea Fintech Week will help accelerate innovation in the fintech industry. (Offline) Three days of fintech IR events, investor consultation, job mentoring, fintech-themed seminars will help with investment promotion and employment opportunities. (Online) Exhibition halls, learning programs, experience programs and seminars will be operated online through metaverse. For participation in exhibition halls, idea contest, IR competition and investment consultation, please see detailed information below. Overview of 2022 Korea Fintech Week (Theme) Fintech, Tearing Down Barriers in Finance The 2022 Korea Fintech Week will be operated so as to help expand and replicate the innovation and growth of the fintech industry in close cooperation with relevant institutions. (Program) Offline and online events will be held simultaneously. a) (Offline) The 2022 Korea Fintech Week will provide a variety of venues for fintech firms, investors, relevant institutions and the public to come together through seminars, consultations, exhibitions and other standing programs. - (Opening Ceremony) Sharing outcomes of the fintech policy and presenting policy direction for innovation. - (Seminar) Seminars organized around specific fintech areas such as blockchain, data, etc. - (Investment) Providing opportunities for fintechs to attract investment through fintech IR, investment consultation, etc. - (Exhibition Halls) Introducing fintech services launched by fintech businesses and financial institutions. - (Programs for Participation) Providing an opportunity for prospective entrepreneurs to pitch ideas about fintech business models through idea contest and mentoring and giving fintech jobseekers a chance to have consultation. b) (Online) Various online program
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Jun 17, 2022

Household Debt Management Plan and Step-by-Step Normalization of Deregulatory Measures

The FSC prepared plans for the normalization of regulation on household debt which contain the new administrations household debt management strategies and a step-by-step normalization in lending regulations in support of housing ladder, as part of the new administrations economic policy agenda announced on June 16. New Administrations Household Debt Management Plan I. Stable Management of Household Debt Growth The government will work to stably manage the growth of household debt so that a considerable expansion in household debt in the process of dealing with the COVID-19 pandemic does not impose burdens on the countrys economy and financial system. - Prevent excessive expansion of household debt relative to income levels by promoting the practice of borrowing based on ones repayment capability (the debt service ratio rule) and making debt payments in installment. II. Step-by-step Normalization of Regulation on Housing Loans The government will work to normalize the regulation on loan-to-value (LTV) ratio in a step-by-step manner in order to help ease difficulties faced by non-speculative homebuyers in the process of tightening control over household debt. - Ease first-time homebuyers maximum LTV ratio to 80 percent. - Normalization of rules on LTV ratios for homeowners (single property and multiple property owners) will be pursued after considering the implementation of the DSR rules and the household debt and real estate market situations. While pursuing a gradual normalization in LTV ratios, the government will seek supplemental measures to help prevent DSR rules from restricting lending. - Expand the level of future income that can be recognized in DSR calculation for young adults (51.6 percent for 20s and 17.7 percent for 30s). - Improve lending regulation for living expenses in line with the implementation of the 3rd stage of individual borrower-level DSR regulation. III. Protection of Vulnerable Borrowers amid Increasing Interest Rates The government will w
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Jun 16, 2022

Post Office-Bank Partnership Expanded to Improve Offline Access to Banking Services

FSC Vice Chairman Kim So-young presided over a memorandum of understanding (MOU) signing event between Korea Post, four major banks and the Korea Financial Telecommunications Clearings Institute (KFTC) on June 16 for expanding consignment partnership between the banks and the post office. Vice Chairman Kim also announced the governments plan for improving offline access to banking services in order to guarantee consumers choice in accessing financial services both online and offline and improve convenience for vulnerable groups such as the elderly. MOU Signing Korea Post, four major banks (Kookmin, Shinhan, Woori and KEB Hana) and the KFTC signed an MOU and agreed to proceed with the consignment of banking services (deposit, withdrawal functions, etc.) to post offices with a goal to make services available within this year. Summary of Vice Chairmans Opening Remarks Rapid digital transformation taking place recently throughout the financial industry including the banking sector has led to an increase in mobile-based and contactless financial transactions and a continuing decline in the number of bank branches. However, offline financial services will continue to play an important role for maintaining the quality of banking services, ensuring inclusive finance for vulnerable groups such as the elderly and meeting diverse demands of consumers. Moreover, it is necessary that the government and the industry make joint effort to help improve offline access to financial services. To this end, the authorities have prepared a plan for improving offline access to banking services to ensure the availability of offline channels that can serve as an alternative to bank branches. Improving Offline Access to Banking Services (Expanding Consignment Partnership) The authorities are seeking a diversification in the availability of offline channels offering simple banking services such as deposit and withdrawal functions through consignment of banking services to the post office and c
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Jun 13, 2022

Household Loans, May 2022

The outstanding balance of household loansin all financial sectors rose KRW1.8 trillion in May 2022, staying at a stable level despite a slight increase from the previous month (up KRW1.2 trillion).The financial authorities will continue to work on stably managing the growth of household debt. (Overall) Household loans in May 2022 increased KRW1.8 trillion across all financial sectors. The growth rate from the same month of the previous year was 3.4 percent, showing a halt in the declining trend seen from the second half of the previous year, but staying at a stable level in general. (By Type) Mortgage loans grew at a slower rate from the previous month but other types of loans including credit loans edged up slightly for the first time this year. - (Mortgage Loans) Mortgage-backed loans rose KRW1.6 trillion in May, showing a slowdown from the previous month due mainly to a drop in group lending for new apartment subscription (from KRW1.1 trillion to KRW0.2 trillion). - (Other Types of Loans) Other types of loans increased KRW0.2 trillion in May, edging up for the first time following a continued decline since the end of the previous year, with a growth in credit loans. (By Sector) Household loans in the banking sector went up at a slower rate compared to a month ago but the pace of the growth accelerated in the non-banking sector as credit finance companies and savings banks saw increases. - (Banking Sector) Banks saw an increase of KRW0.4 trillion in household loans, showing a decline from the previous month (up KRW1.2 trillion). Mortgage loans from banks rose KRW0.8 trillion,growing at a slower rate compared to the previous month (up KRW2.0 trillion), as jeonse loans expanded (up KRW1.1 trillion) but group lending for new apartment subscription edged lower (up KRW0.2 trillion). Other types of loans declined KRW0.5 trillion and fell at a slower rate compared to the previous month (down KRW0.9 trillion) as credit loans edged down KRW0.2 trillion. -(Non-Banking Sect
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Jun 09, 2022

Financial Authorities Hold Meeting to Review Risks in Insurance Sector

The FSC held a meeting on June 9 to review risks and discuss response measures in the insurance sector amid increasing volatility in financial environments due to increases in interest rates and the exchange rate.For insurance companies declining levels of risk-based capital (RBC) ratios as a result of steep rate hikes causing an expanded level of losses on valuation of bonds, the authorities have prepared a measure for providing a buffer to release a portion of surplus that insurance companies may recognize as available capital for calculating RBC ratios. Key Risk Factors Response Measures The meeting discussed in depth the risk factors in global financial markets such as interest rate hikes and exchange rate volatility following monetary tightening by major economies amid inflation pressure and prolonging war in Ukraine and dealt with both long- and short-term response measures. I. Prepare Buffer for Declining RBC ratio In response to declining RBC ratios following interest rate hikes, the authorities will recognize inclusion of the LAT(liability adequacy test) surplusinto the available capital for the calculation of RBC ratios.The current RBC system based on the difference between the mark to market valuation of assets and historical cost valuation of liabilities results in a decline in RBC ratios in times of rising interest rates as the new method only incorporates losses on valuation of assets into available capital. However, when applying this measure, reductions in insurance liabilities as a result of interest rate hikes are also incorporated as available capital, thereby providing a buffer to the decline in RBC ratios. Insurers will be able to include (a) 40 percent of the LAT surplus to their available capital (b) within the limit of losses on valuation of bonds available for sale. a) In times of interest rate fall, 40 percent of the LAT surplus reserve,which represent an increase in insurance liabilities, is deducted from the available capital. Considering
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Jun 03, 2022

Accounting Review Process to be Made More Expeditious and Transparent

The FSC introduced a plan to bring about improvements to the accounting review process with aims to prevent the prolonging of the review process and to ensure the protection of the right to defense for businesses undergoing scrutiny during the review process by the Financial Supervisory Service (FSS). The period of the review process will be one year in principle with a six-month extension allowed upon approval from Governor of the FSS for unavoidable reasons. To guarantee the right to defense for businesses undergoing scrutiny, improvements will be made to the contents of the prior notification form and the period for which businesses can access the QA document will be extended. Background An accounting review (or inspection) examines whether a companys financial statement and audit report have been prepared properly according to the relevant accounting and auditing standards. It is a supervisory function that seeks to protect various stakeholders such as investors and to encourage sound business management activities as well. Accounting review is an important aspect to bringing about innovation in capital markets and improving investor trust.Transparency in capital markets begins with the accuracy and promptness in the accounting information being disclosed and accounting review as a supervisory mechanism induces accurate accounting practices by businesses through identification and correction of inappropriate accounting information. In addition, under the principle-based IFRS system that recognizes diversity in accounting practices, accounting review provides guidance for businesses in conducting their accounting practices. The government has continued to make efforts to bring about improvements to the accounting review system since the accounting reform.With an introduction of the financial statement review system, the processing time for minor violations has been reduced considerably.The adoption of an adversary procedure during the review processhas helped to
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Jun 02, 2022

Debtor Assistance with Legal Representation and Litigation Services Available at Free of Charge

The FSC unveiled an overview of the current status on the use of debtor assistance with legal representation program on June 1. In 2021, a total of 1,200 victims of illegal private lending or debt collection activities applied for support in 5,611 cases and debtor assistance with legal representation was provided in 4,841 cases in total, which signifies that the debtor assistance program has become a crucial social safety net for damages inflicted by illegal private lending. The authorities plan to continue to make efforts to prepare for a rise in demand for remedies from illegal private lending by strengthening ties with various types of inclusive finance measures and securing sufficient fiscal resources, while working to stamp out illegal private lending by closely cooperating with investigative authorities. Overview Since January 28, 2020, the government has been offering the debtor assistance with legal representation programat free of charge to help victims of illegal debt collection activities done by both registered and unregistered money lenders and to support those that have fallen prey to exorbitant interest charges in excess of the maximum legal lending rate. When a victim of illegal private lending applies to seek support through the Financial Supervisory Service (FSS)s website or via a phone callplaced to the illegal private lending help center or the Korea Legal Aid Corporation (KLAC), attorneys from KLAC provide assistance with legal representation in dealing with illegal private lenders and for litigation services at no cost to debtors. (Legal Representation for Handling Debt Collection Issues) KLAC attorneys provide service of handling debt collection issues with creditors (money lenders) in place of debtors in order to help debtors avoid any harm caused by illegal debt collection activities. (Litigation Services) For damages incurred by exorbitant interest charges in excess of the maximum legal lending rate and illegal debt collection activities, K
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May 31, 2022

Supplementary Budget Approval at National Assembly to Expand Availability of Financial Support

The National Assembly passed the supplementary budget on May 29, 2022 which includes KRW1.7 trillion worth of financial support programs intended to help the self-employed business owners and small merchants experiencing difficulties due to COVID-19 and the vulnerable groups such as young adults and lower income groups. The financial support programs to help improve peoples living conditions consist of six main tasks worth about KRW1.7 trillion in total in the supplementary budget. - (a) KRW600 billion (plus KRW500 billion in in-kind contribution) in debt adjustment, (b) KRW680 billion in low interest rate transfer loans and (c) KRW220 billion in targeted support funds to help with the recovery of the self-employed business owners and small merchants and improve their competitiveness - (d) KRW15 billion in expanded supply of loans for young adults with low incomes and (e) KRW48 billion in special guarantees for those with lowest credit scores to help improve the access to financial services for vulnerable groups such as lower income households and young adults - (f) KRW109 billion in government-sponsored transfer loans to help ease the high interest payment burdens of non-speculative homeowners and improve the overall structure of household loans Key Details of Financial Support Programs to Help Peoples Livelihood I. Debt Adjustment Program for Small Merchants and the Self-employed a) Program Overview (Program Purpose) To support normal business operation and restart efforts of small merchants and self-employed business owners who have been experiencing difficulties in making loan payments due to losses accrued from the COVID-19. - Provide preemptive support to prevent deterioration in business foundation via sale of overdue debts or collaterals in the case that the level of business recovery is not sufficient for loan payment burdens. - Assist restart efforts of borrowers who have turned insolvent due to difficulties in making payments for abruptly increased debt.
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May 27, 2022

Government Approves Revision Bill to FSCMA for Introducing Business Development Companies

The government approved the revision proposal for the Financial Investment Services and Capital Markets Act (FSCMA) during a cabinet meeting held on May 26. The revision proposal introduces business development companies (BDCs), a new form of venture capital investment vehicle focused on investing in startups and innovative companies and which offer more cashability as they are listed on an exchange. BDCs will be required to invest at least a certain portion (e.g. 60%) of funds assets to startups and innovative companies and will be operated as closed-end funds, which will help companies to raise funds stably for a longer period of time. In addition, to allow investors to more easily liquidate their investment, BDCs will be operated as exchange-listed to enhance their cashability. The government expects that the introduction of BDCs will help (a) provide a more stable way of raising funds for early-stage businesses while providing retail investors an opportunity to diversify their investment into startups and innovative companies using an already established investment mechanism, (b) increase vitality in the economy by utilizing abundant market liquidity as venture capital and (c) promote sound investment practices on non-listed companies as BDCs will be operated by professional entities and will come under the purview of the FSCMAs regulatory framework. Background On May 26, 2022, the government approved the revision proposal for the FSCMA at a cabinet meeting with a goal of introducing business development companies, a new form of investment vehicle focused on investing in startups and innovative companies before they become listed on a major exchange. Key Details (Basic Direction) As a new form of investment vehicle, BDCs will be introduced in a way that incorporates the advantages offered by both publicly offered funds and private fundsapplication of an economy of scale and investor protection mechanisms offered by publicly offered funds and utilization of flexi
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May 24, 2022

Vice Chairman Speaks about Importance of Investor Protections in Meeting on Digital Assets

FSC Vice Chairman Kim So-young attended a meeting on the enactment of a law on digital assets with members of the National Assembly and officials from other relevant government agencies on May 24.The following is a summary of Vice Chairman Kims opening remarks. Vice Chairmans Remarks (Government Measures on Digital Assets) The government has been working on strengthening investor protections for digital asset transactions while providing support for innovation using blockchain technologies through an inter-ministerial approach.Starting from March 2021, the government has put in place a registration system for digital asset service providers through the revised Act on Reporting and Using Specified Financial Transaction and began to implement regulatory measures for anti-money laundering duties and investor protections. These measures were intended to minimize damages to users resulting from indiscriminate issuance of digital assets. Despite the need to further promote new and innovative technologies, however, there exist concerns about risks to investor protection and market stability as digital assets issued overseas are being traded in domestic markets without any regulations. (Future Plan on Digital Assets) As it has become evident from the recent crash of TerraUSD and Luna, the rapid growth of the newly emerging digital asset markets such as stablecoins and DeFi have spurred discussions globally about their impact on the stability of financial system, consumer protection and monetary and economic policies.In line with these discussions, there are currently thirteen relevant bills on digital asset investor protection pending at the National Assembly. Recently, the government has made building digital asset infrastructure and relevant regulatory framework as one of the key national policy initiatives and made an announcement accordingly. Some of the details of this policy task will include creating an environment where investors can invest in digital assets safely
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