Annual Work Plan
- Establish a specialized IT security agency for the financial sector
- Abolish financial regulations that hinder sound competition in financial markets
- Develop new pension products tailored to various consumer needs
- Establish a special agency to provide guarantee for the shipping industry
- Stimulate PEF industry
- Establish a technology credit bureau (TCB)
- Conduct annual survey on public awareness of financial policy
The FSC announced its financial policy direction for the year of 2014 in pursuit of Korea’s financial service industry more trustworthy and globally competitive.
In 2013, the FSC achieved its policy goals such as protecting financially-marginalized individuals and laying a foundation for creative finance. A recent string of financial incidents, however, undermined public trust in the financial sector. It has become essential to restore the trust.
‘Public trust’, ‘market confidence’ and ‘consumer satisfaction’ are three pillars under which the FSC will push forward its financial policy throughout this year. The FSC set three policy goals: (a) establish market discipline in financial markets; (b) secure stability in financial system; and (c) strengthen financial industry’s competitiveness.
1. ESTABLISH A SPECIALIZED IT SECURITY AGENCY FOR THE FINANCIAL SECTOR
A specialized IT security agency will be established to better protect financial consumers against rapidly evolving methods of financial fraud. Currently, IT security functions are carried out separately by the Financial Security Agency(FSA), the Korea Financial Telecommunication & Clearing Institute(KFTC) and KOSCOM. Some functions will be transferred to the new agency to provide financial institutions with a total package of specialized IT security service.
The new agency will serve as an integrated control for IT security, responsible for a whole process of monitoring, security alert, analysis and response in the event of IT security breach in all financial firms. The new agency will also carry out responsibilities such as security authentication, security policy research and IT expert training. Details will be finalized by the end of June 2014, with an aim to launch the new agency in 2015.
The FSC and relevant ministries will announce at the end of February comprehensive measures for personal data protection.
2. ABOLISH FINANCIAL REGULATIONS THAT HINDER COMPETITION
The FSC will thoroughly review all financial regulations in 5 years since 2008 in order to find out regulations or practices that need reform. In principle, regulations that hinder completion will be abolished to encourage competition and innovation in financial markets. To this end, the FSC will hold a T/F meeting on a monthly basis, as part of joint effort s by both public and private sectors for regulatory reform. At the same time, the FSC will continue to introduce new systems that promote competition, such as ‘bank accounting switching’ in which money transfer services linked to a previous bank’s account automatically shift to a new bank’s account if customers switch their primary bank account.
3. DEVELOP NEW PENSION P RODUCTS TO MEET VARIOUS CONSUMER NEEDS
The FSC plans to develop new pension products tailored to different needs of various consumer groups such as the disabled, low-income earners or baby-boomer retirees. For example, the FSC plans to launch a new pension insurance product for the disabled in April this year that the policyholders pay less insurance premium while receive more at their pensionable age. The FSC will consider policy incentives such as tax exemptions to encourage more low-income earners or baby-boomers to sign in pension products.
4. CREATE A SPECIAL AGENCY TO PROVIDE GUARANTEE FOR THE SHIPPING INDUSTRY
The FSC will establish a special agency to provide cyclical sectors such as shipping industry with project-based guarantee in order to make them less sensitive to business cycles. The agency will provide guarantees based not on a company’s credit risk, but on LTV or cash flow from each project. The agency will be established as a subsidiary of policy banks with capital jointly raised by policy banks and private investors.
5. REVISE PEF REGULATIONS
The FSC will make PEF regulations simpler and clearer in order to foster PEFs to play a leading role in capital markets. Regulations that restrict PEF operations will be eased or revised so that PEFs would be able to be given more flexibility in investment and operation.
6. ESTABLISH A TECHNOLOGY CREDIT BUREAU(TCB) AND TECH INFOR MATION DB
The FSC plans to complete the establishment of a technology credit bureau (TCB) and technology information DB in the first half of 2014. The DB will integrate technology information scattered around different institutions and process the data to be shared and used in technology evaluation or loan application reviews. The TCB and tech DB will enable small tech firms to receive loans from banks with their innovative ideas or technology as collateral.
7. CONDUCT SURVEY ON PUBLIC AWARENESS OF FINANCIAL POLICY FOR BETTER CONSUMER SATISFACTION
The FSC will conduct an annual survey on public awareness of financial policy to reflect results of the survey into devising financial policy. The FSC will survey financial consumers, financial company employees and experts in either November or December every year on their awareness and satisfaction of financial policy to deliver consumer-oriented financial policy.
8. STRENGTHEN HOUSEHOLD DEBT MANAGEMENT
The FSC will continue to improve the structure of household loans with a bigger share of fixed-rate & amortization loans, while managing the pace of household debt growth.
9. REFORM MICROFINANCE SYSTEM
The FSC will integrate various microfinance programs such as Credit Recovery Program, Smile Microcredit and Happiness Fund into a single microfinance organization in order to provide more effective microfinance service.
*Please refer to the attached PDF for details.