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May 25, 2021
- Government Approves Revised Rules to Introduce Small-sum & Short-term Insurance
- The government approved the revisions to the Enforcement Decree of the Insurance Business Act at a cabinet meeting on May 25, aiming to introduce a small-sum, short-term specialized insurance business with a variety of insurance coverage such as pet, leisure and travel insurance. Key Revisions (Small-sum Short-term Insurance Business) The minimum capital requirement for a small-sum, short-term specialized insurance business will be set at KRW2 billion. They are allowed to provide various types of insurance coverage e.g. pet insurance, leisure travel insurance, weather insurance, etc with a one-year renewable term and premiums of up to KRW50 million. The insurers annual gross premium revenue will be capped at KRW50 billion. (Scope of Insurers Subsidiaries) To promote digital transition in the insurance sector, the revision permits insurers to own more than a 15% stake in a healthcare or MyData service provider as subsidiaries. (Access to Administrative Information) Currently, insurance policy holders are required to submit required administrative documents such as a copy of residence registration, family relation certificate, drivers license, etc, to insurers. To ease such a burden, the revision will allow insures to access to administrative information upon policy holders consent. (External Evaluation of Policy Reserves) Insurance businesses with total assets of KRW1 trillion or more will be required to have external actuaries approve the appropriateness of their policy reserve. Schedule The revisions will take effect from June 9, 2021. The FSC will complete revisions to subordinate rules including the Regulation on Supervision of Insurance Business in accordance with the revised Enforcement Decree. * Please refer to the attached PDF for details.
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May 25, 2021
- Government to Work on Improving Financial Consumer Education
- Vice Chairman Doh Kyu-sang presided over the 1st consultative body meeting on financial education virtually held on May 25. The consultative body, which had been operated on a voluntary basis from 2007 to 2020, turned into a statutory organization with the enactment of the Financial Consumer Protection Act taking effect from March 25, 2021. At its first meeting, chaired by FSC Vice Chairman, the consultative body discussed and approved basic principles for improving financial consumer education and detailed plans. Key Discussions (Operation of the Consultative Body) Under the Act, the consultative body is composed of government officials from eight relevant ministries and deputy governor of the FSS. However, it will be attended by private sector experts from consumer groups, research and education institutions. The consultative body will hold its regular meeting bi-annually in June and December. It may hold irregular meetings, if needed. (Financial Education Plan for 2021) The government will strengthen online education infrastructure and programs to ensure the uninterrupted financial education under the Covid-19 circumstances. Relevant institutions will work together to develop effective and creative materials to boost public awareness of the Financial Consumer Protection Act. (Role Assignment among Financial Education Institutions) Financial consumers are categorized into groups according to their lifecycle and specific circumstances, For each group, a responsible education institution will be assigned. Responsible institutions will be asked to submit evaluation reports and plans on financial education for each group to the consultative body in December every year. (Certificate for Educational Content) Financial education institutions will jointly review education content on the basis of its appropriateness, accuracy, delivery and fairness. Qualified content will be granted a certificate, which is subject to reassessment every one or three years. (Certificate for
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May 24, 2021
- Financial Authorities and Relevant Institutions Declare Support for TCFD and Its Recommendations
- The FSC along with thirteen other relevant institutions announced their official declaration of support for the Task Force on Climate-related Financial Disclosure and its recommendations on May 24. The declaration was followed by the green finance consultative bodys kick-off meeting chaired by Vice Chairman Doh Kyu-sang. Vice Chairmans Remarks Last year, the average temperature in Europe and Asia reached a record high in 111 years according to the Global Climate Report 2020 by the U.S. National Oceanic and Atmospheric Administration. Considering ripple effects of climate change on the stability of financial systems, the financial sector should preemptively take a responsible role in global issues such as the climate change. Recently, the EU has introduced green taxonomy which provides standards on support for green industries. The Biden administration in the U.S. has strengthened its climate leadership by rejoining the Paris Agreement and holding a Leaders Summit on Climate. The Korean government, too, declared the 2050 carbon net zero goals and enhanced its carbon reduction objectives while suspending state-backed financial institutions financing of overseas coal plants. With the K-New Deal initiative, the government has been expanding investments in green sectors as well. (Support for TCFD and its significance) The financial authorities plan to boost cooperation with the international society to more actively respond to climate change. Last week, the FSC and FSS applied for membership to the Network of Central Banks and Supervisors for Greening the Financial System. Today, the FSC and thirteen relevant institutions are here to announce official declaration support for the TCFD. The TCFD is a global consultative body created to promote climate-related financial disclosures. In 2017, the TCFD introduced its recommendations and more than 2,000 institutions from 78 countries across the globe have shown support for the TCFD and its recommendations. In Korea, a total of
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May 24, 2021
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May 21, 2021
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May 21, 2021
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May 20, 2021
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May 17, 2021
- FSC Announces Plan to Promote the Use of Digital and Contactless Insurance Sales Mechanisms
- The FSC announced a plan to improve rules on insurance business in order to promote the use of digital, AI-based and contactless insurance sales mechanisms as part of the broader aim to boost consumer confidence and promote innovation in the insurance industry. Insurance sales channels face structure changes amid an expansion of contactless services and digital technologies, increasing number of platform businesses entering the market and the growth of general agencies (GAs). To improve the effectiveness of consumer protection while removing some of the inefficiencies observed in the current insurance sales practices, the authorities have prepared the following plan for changing the rules on insurance sales mechanisms. Key Details A. Face-to-Face Sales - Previously, insurance agents and brokers were required to meet customers face-to-face at least once to explain coverage details. However, with the telemarketing safeguard measures in place, such as the requirements for recording and confirmation by insurers, sellers are allowed to provide explanations via telephone calls. (rule change completed on Mar 25, 2021) - When subscribing for an insurance coverage using a mobile phone, customers faced the inconvenience of having to put their signature multiple times throughout the process. This electronic signature requirement will be reduced down to only once at the beginning of the subscription process to improve convenience. (further improvements expected within May 2021) B. Telemarketing - With the use of the text-to-speech AI-based technology, insurance agents and brokers will no longer have to read the entire sales script that usually took about thirty minutes to finish. With the AI-based voicebot, the salesperson is able to instead focus on answering questions from the customer and providing supplemental information. (implementation expected in Q3 2021) - Previously, telemarketing and mobile sales mechanisms remained two distinct sales channels. However, a hybrid sale
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May 13, 2021
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May 12, 2021
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May 12, 2021
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May 11, 2021
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May 10, 2021
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May 10, 2021
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May 06, 2021
- Adjustments Made to the Corporate Bond and CP Purchase Program for Low-rated Companies
- The FSC and the state-backed financial institutions announced that they will bolster support for low-rated companies through the pandemic-related support measures already put in place last year, which include a special purpose vehicle (SPV) aimed at purchasing low-rated corporate bonds and CP, primary collateralized bond obligations (P-CBOs) and the corporate bond and CP refinancing support program. In response to the spread of market anxieties in the wake of the COVID-19 pandemic, the government launched the corporate bond and CP market support programs covering businesses with credit ratings ranging from AA or above to A to BB. As a result, the corporate bond and CP markets have been stable thus far. However, there have been rising concerns about credit downgrades, limited support available through P-CBOs and the redundancy in the utility of some of the programs. As such, the authorities will make following adjustments to the programs to bolster support for SMEs. Key Measures (Support for low-rated businesses) First, more flexible eligibility requirements will be applied to low-rated companies. For the so-called fallen angels whose credit rating has declined after the announcement was made on the governments plan to operate an SPV on April 22, 2020, the provision of support will continue to be available for BB rated companies. For companies facing the risk of credit downgrades, state-backed financial institutions will provide comprehensive consulting services on their management status, financial structure, etc. (Temporary expansion of P-CBO support) First, individual companies sales cap will be expanded for SMEs that have seen their sales drop fifty percent or more and for low-rated (BB ratings) SMEs. The current standard of measuring their sales performance that is based on the estimated sales expected for the upcoming year will be changed to an arithmetic mean from the past three years. The sales cap on low-rated SMEs will also be expanded based on their fields
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May 06, 2021
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May 06, 2021
- Financial Authorities to Improve Rules on the Suspension of Licensing Review Process
- The financial authorities introduced the measures to improve rules on the suspension of licensing review process for financial institutions. The measures are intended to increase predictability and minimize legal uncertainties for businesses. The rules on the suspension of licensing review process have been introduced to prevent the granting of license to legally disqualified entities that may be undergoing an investigation or lawsuit at the time of their licensing review process. Under the rules, financial authorities may decide to suspend the licensing review process (a) if the applicant is facing a criminal charge or under an investigation or inspection by a relevant authority and (b) if the lawsuit or the investigation or inspection is deemed to have significant impact on the licensing review process. However, there have been criticisms regarding the current system as it serves a contradictory purpose to the principle of presumption of innocence, leads to unnecessary breach of rights and interests on the part of the applicant, impedes the level of predictability for resumption of the review process and raises the issue of inconsistency in terms of the application of the rules across different sectors. As such, the FSC will carry out the following measures to make improvements to the current suspension of licensing review process. Key Measures First, the authorities will newly establish a guideline that provides a specific and detailed list of grounds and reasons for suspending a licensing review process. Second, for business entities whose licensing review process has been suspended, the authorities will reconsider every six months the possibility of resuming the licensing review process and whether to extend the suspension period. Third, the suspension of licensing review process, which is currently not applicable to insurance businesses, specialized credit finance companies and financial holding companies, will be applied across all financial sectors to enhanc
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May 03, 2021
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May 03, 2021
- Authorities Introduce Measures to Strengthen Oversight on Quasi-investment Advisory Businesses
- The financial authorities held the 3rd taskforce meeting on the prevention of unlawful and unfair trading activities in stock markets on April 30 and reviewed progress in the implementation of various measures. At the meeting, the authorities introduced and decided on the measures to strengthen management and supervision on the quasi-investment advisory businesses. The measures are aimed at (a) preventing quasi-investment advisory businesses from engaging in unauthorized business activities, (b) strengthening management from the time of their business registration to operation and exit and (c) bolstering detection of illegal activities using social media chatrooms, etc. Background A quasi-investment advisory business provides investment advisory services to an unspecified number of individuals. There are no particular entry requirements for these businesses as they are only required to register with the authority.With the goal of preventing damages to investors, the government has been working on regulatory improvements. Since September last year, the FSS has conducted inspections on 351 entities and detected a total of 54 cases where illegal activities are suspected. As the sales practice of quasi-investment advisory businesses has shifted to online spaces such as social media chatrooms and Youtube, the number of investor complaints being filed has also increased.Based on false or exaggerated promises of investment returns, investors are lured into paying high fees, inflicting financial damages to investors. As such, the financial authorities along with private sector experts have set up a taskforce and prepared the following measures to strengthen oversight on quasi-investment advisory businesses. Key Measures I. Root out unauthorized business activities - Strengthen public awareness on unlawful activities: The authorities will strengthen efforts to better inform investors about the typical types of illegal activities, including stock advisory social media chatroo
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Apr 29, 2021
