Press Releases - Financial Services Commission

Press Releases

Period: start
~
end

1month 3month Reset

Requirement

Dec 18, 2020

Tech Financing Guildeline to Facilitate Effective Lending Support For Innovative SMEs

The FSC announced the introduction of a new tech financing guideline, which outlines details about the specific target business sectors and relevant procedures of tech financing. The guideline will go into effect from January 2021.BACKGROUNDSince it was first introduced in January 2014, tech financing grew significantly as more banks and tech credit bureaus (TCBs) became interested in offering financing options to innovative SMEs based on their technological prowess and future growth potential. Until now, five tech credit bureaus and ten banks have been providing tech credit evaluation service using their own evaluation models. In order to strengthen the accountability and stability of tech financing and improve its qualitative standards, a guideline on tech financing has been established as follows.KEY DETAILS1) Setting up necessary infrastructure for tech financing- Require TCBs to set up a division specializing in tech financing and specify division members’ professional qualifications- Introduce a standardized TCB evaluation model to enhance consistency and stability- Establish an independent organization charged with inspecting the standard TCB evaluation model2) Providing support to SMEs with technological prowess and innovativeness- SMEs with innovative ideas in manufacturing, knowledge and content industries, tech-based environmental or construction sectors, new and renewable energy sectors, as well as those with proven records of technological prowess through patents, etc.3) Establishing clear procedures on tech financing- Provide specific guidelines on tech financing procedures for SMEs, banks, TCBs and Korea Credit Information Services- Make site inspections mandatory in principle with specific cases for exemption- Require tech credit evaluating institutions to set up internal inspection frameworks to ensure the appropriateness and fairness of their tech credit evaluation4) Recommending a set of professional rules and ethics for banks and TCBs- Promote
Attachment 1
Dec 17, 2020

KoFIU Begins Operating Upgraded AML System

The FSC announced that the Korea Financial Intelligence Unit (KoFIU) will begin to operate an upgraded anti-money laundering system from December 17, which will improve efficiency in its suspicious transaction report system, strengthen assessment and analysis capabilities and enhance information security.BACKGROUNDThe KoFIU analyzes suspicious transaction reports (STR) and currency transaction reports (CTRs) of financial companies and provide results to law enforcement agencies for detection and prevention of money laundering activities. It is a central AML infrastructure connecting about 6,000 reporting entities, eight law enforcement agencies and some twenty related administrative agencies. Since the system began to operate in 2002, the rising volume of reports it handles has placed increasing burdens on the system. To address this problem, the KoFIU started upgrading the system in May 2019, and after system development and a test run, the upgraded AML system began its operation on December 17, 2020.IMPROVEMENTS EXPECTATIONS(INCREASED EFFICIENCY IN STR SYSTEM) The upgraded AML system enables financial institutions to file STRs about three times more than that of the previous capacity. The KoFIU’s processing capacity has also increased about five times, guaranteeing a swift and secure transfer and processing of the rising volume of STRs.(STRENGTHENED ASSESSMENT ANALYSIS CAPABILITIES) The upgraded AML system utilizes machine learning technology in assessing and analyzing money laundering activities. By directly connecting KoFIU with other administrative agencies, it also greatly reduces the time it takes to gather necessary data from relevant institutions.(ENHANCED INFORMATION SECURITY) The upgraded AML system has been set up at the National Information Resources Service to ensure high levels of security and stable management.FURTHER PLANSThe authorities will work to ensure system stability and continue to effectively respond to money laundering schemes that are b
Attachment 1
Dec 16, 2020

FSC Plans to Promote Role of Insurers in Healthcare Industry

The FSC announced its plans to expand the role of insurance businesses in the provision of non-medical healthcare services on December 16. The FSC will work to improve relevant regulations through consultative body meetings on digital finance and by setting up a taskforce to prepare more detailed plans in the first half of 2021.BACKGROUNDHealthcare and insurance share a common denominator in offering security to individuals, although the functional linkage between the two has been severed due to restrictions in regulation and limitations in technology. However, with the advancement of technologies in the areas of Internet-of-Things, big data and platforms, a convergence between healthcare and insurance services is increasingly becoming available. Amid an aging society and higher prevalence of chronic diseases, the newly emerging healthcare industry has received growing attention. As such, the FSC plans to pursue a mid- to long-term strategy of promoting the role of insurers in the provision of non-medical healthcare services, which will contribute to the overall improvement in the healthcare system.KEY MEASURESI. ALLOW INSURERS TO PROVIDE HEALTHCARE SERVICES TO GENERAL PUBLICCurrently, insurance companies are allowed to provide non-medical healthcare services only to their own coverage subscribers, such as personal health data management and fitness assistance platform services, as indicated by the guidelines issued by the Ministry of Health and Welfare. This service provision will be extended to the general public with the expectation of promoting diversity and quality of healthcare services while lowering insurance premiums in the long run.II. IMPROVE RULES ON SUBSIDIARIES FOR INSURANCE BUSINESSESCurrently, insurance companies are permitted to own shares of subsidiaries in the areas prescribed by the Enforcement Decree of the Insurance Business Act. However, due to a lack of specific provisions, there exist legal uncertainties with respect to whether insurers are
Attachment 1
Dec 14, 2020

FSC Chairman Holds Press Briefing and Discusses Policy Outline for Next Year

FSC Chairman Eun Sung-soo held a virtual press briefing on December 14 and discussed key policy plans for the next year.The following is a summary of Chairman Eun’s remarks.(LOOKING BACK TO 2020) In the wake of the pandemic declaration earlier this year, financial markets fell into turmoil temporarily. Contractions in economic activities put extra burdens on small merchants and self-employed business owners. Then, the KRW175 trillion-plus emergency support programs were introduced by the government to respond to the situation in a prompt and preemptive manner. As a result, the OECD forecast Korea’s 2020 economic growth to be the first among its member economies. In recent weeks, KOSPI has been setting record highs as well.This successful market turnaround was made possible due to the effectiveness of K-quarantine and economic response measures on top of strong corporate earnings performance. While focusing our attention on the COVID-19 crisis management, the FSC has also worked on financial innovation, consumer protection and fair economy measures this year. The revision to the Credit Information Use and Protection Act built foundations to develop data industry. The consultative body meetings on digital finance have focused on establishing an environment for fair competition between financial companies, fintechs and big techs. The Financial Consumer Protection Act is scheduled to go into effect next year and the newly passed legislation on the supervision of non-holding financial groups will help remove loopholes. In the meantime, however, the issue of large scale investor damages in the wake of redemption halts by some PEFs remains regrettable.(2021 FINANCIAL POLICY OUTLINE) The first policy task is overcoming the pandemic crisis. Overcoming the spread of the virus requires prompt treatment, preventive measures and development of vaccines. The COVID-19 financial policy requires a well-balanced functioning of financial support for the vulnerable sectors, financi
Attachment 1
Dec 14, 2020

FSC Chairman Speaks about the Need to Strengthen Anti-Money Laundering Measures

FSC Chairman Eun Sung-soo presented commendations to those who contributed to the prevention of money laundering at an event held on December 14 and spoke about the need to strengthen AML capabilities.The following is a summary of Chairman Eun’s remarks.The Financial Action Task Force’s 2020 mutual evaluation report on Korea placed Korea’s AML regime on a par with that of some of the advanced economies. It is the result of close cooperation between the financial institutions, law enforcement agencies and financial authorities.Amid growing threats about the diversification and advancement of money laundering techniques, especially through digital finance, it is necessary to draw up plans to strengthen AML capabilities focusing on the following measures.First, the Korea Financial Intelligence Unit (KoFIU)’s investigation and analysis capabilities should be strengthened and its communication with law enforcement agencies expanded.Second, the AML supervision and inspection capabilities should be bolstered. With technological advancements and newly emerging industries, more and more business entities will be subject to AML compliance.Third, more professional personnel should be hired at the KoFIU for a more systematic human resources management and to improve the level of expertise. The need to increase international cooperation on AML, rising cases of suspicious transaction reports and growing numbers of entities being subject to AML compliance all require an improvement to the organizational capacity.In order to ensure an effective functioning of the AML regime, close cooperation is essential among all relevant institutions, including the financial institutions, KoFIU and law enforcement agencies.* Please refer to the attached PDF for details.
Attachment 1
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
Attachment 1
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
Attachment 1
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
Attachment 1
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.
Attachment 1
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
Attachment 1
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.
Attachment 1
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
Attachment 1
Dec 07, 2020

FSC to Introduce Routine Inspection of Personal Data Protection at Financial Institutions

The FSC unveiled its plans to introduce a routine inspection of personal data protection at financial institutions on December 4 to ensure consistency in data protection and improve accountability. The plans include establishing specific inspection standards according to the data lifecycle, providing feedbacks on a regular basis through Financial Security Institute and setting up self-inspection guidelines for financial institutions. The routine inspection on the performance of data protection is scheduled to go into effect on February 4, 2021.BACKGROUNDWith the availability of new technologies, data pseudonymization/anonymization, data convergence and so on, the process of monitoring and inspecting how financial institutions handle data protection needs improvements. In this regard, the following issues have been identified as problematic—(a) lack of specific inspection standards, (b) difficulty in carrying out a comprehensive and systematic inspection on more than 3,000 financial institutions and (c) lack of self-inspection guidelines for financial institutions. To address these issues, the FSC has drawn up the following measures.KEY MEASURESI. IMPROVE INSPECTION CRITERIA STANDARDSIn order to ensure a close inspection of the performance of data protection, specific inspection criteria will be established with 9 overall categories and 143 subcategories. The detailed inspection criteria will reflect the different stages of data lifecycle and will be measured in four levels—(a) compliant, (b) partially compliant, (c) not compliant and (d) not applicable.To guarantee a systematic management and monitoring of the newly available technologies, such as data pseudonymization/anonymization, data convergence and so on, a close inspection on the compliance status of technical and managerial data protection measures will be carried out. Financial institutions with outstanding performance and an accident-free status for a certain period will be awarded safety certification
Attachment 1
Dec 03, 2020

FSC to Introduce Improvements to Subscription Economy's Payment and Refund System

The FSC announced its plan to improve rules on subscription businesses’ payment system to enhance consumer protection and user experience on December 3.Subscription businesses generally attract customers by offering free subscription to their services first. However, once the free subscription period expires, the procedure of informing customers about the details of recurring payments and their cancellation and refund policy has remained inadequate. As such, the FSC plans to work on the following measures to strengthen consumers’ right to information, simplify the cancellation process and make more refund options available in subscription businesses.KEY MEASURESI. ESTABLISH STANDARDIZED TERMS AND CONDITIONS(DEFINITION OF RECURRING PAYMENTS) A clearly defined scope of recurring payments will be introduced on the standardized terms and conditions.(NOTIFICATION REQUIREMENT) Subscription businesses will be required to notify their customers at least seven days prior to switching their services from free offering to recurring payment-based services.(CANCELLATION) The process of cancelling a subscription service will be made easier through mobile applications and online platforms and the cancellation of services will be made available even after the regular customer service hours.(REFUND POLICY) When a cancellation of recurring payments occurs, only the amount of fee commensurate with the used monthly service may be charged, while more refund options will be made available through credit cards and account transfers.II. STRENGTHEN PAYMENT GATEWAYS’ SUPERVISION OVER THEIR AFFILIATESBy introducing revisions to the Enforcement Decree of the Specialized Credit Finance Business Act, legal grounds will be established that will allow payment gateways to strengthen supervision over their affiliates and ensure that their affiliates provide appropriate transaction information to customers.* Please refer to the attached PDF for details.
Attachment 1
Dec 02, 2020

2021 Budgetary Expenditures to Focus on Economic Recovery and Financial Inclusiveness

The FSC announced its budgetary expenditures of KRW3.9 trillion for 2021, which will be allocated for (a) pandemic recovery and post-COVID-19 preparation measures, (b) boosting economic recovery and (c) ensuring support for the financially vulnerable groups.I. COVID-19(MARKET STABILIZATION) Liquidity injection of KRW229.6 billion and KRW12.6 billion through Korea Development Bank and Industrial Bank of Korea, respectively, to minimize effects of the pandemic(KOREAN NEW DEAL FUND) KRW510 billion investment in the Korean New Deal fund through KDBII. ECONOMIC RECOVERY(NEW GROWTH ENGINES IN FINANCIAL INDUSTRY) KRW18.4 billion in comprehensive support for fintechs and KRW1.24 billion in support for KONEX listing of early stage SMEs and startups(SMES MIDDLE MARKET ENTERPRISES) (a) KRW65.2 billion investment in innovative solutions in key industries and in facility investment in new growth sectors, (b) KRW45 billion in facility investment to improve the industrial workplace environment and (c) KRW240 billion investment toward the innovation venture fund in support of the country’s materials, parts and equipment industriesIII. FINANCIAL INCLUSIVENESS(STEADY SUPPLY OF STATE-BACKED HOUSING LOANS) KRW50 billion investment in Korea Housing Finance Corporation to ensure a steady supply of fixed rate housing loans(MICROFINANCING OPPORTUNITIES) KRW195 billion investment in Korea Inclusive Finance Agency to ensure a steady supply of microloan products for various groups* Please refer to the attached PDF for details.
Attachment 1
Dec 02, 2020

FSC Revokes Business Registration of Lime Asset Management

The FSC announced its decision to revoke the business registration of Lime Asset Management on December 2 and to impose a fine of KRW950 million and issue suspension of duties on its staff and executive personnel. According to inspections carried out by the Financial Supervisory Service, Lime Asset Management was found to have engaged in illegal and inappropriate fund management activities, which caused a large scale suspension of redemptions for investors in the amount of about KRW1.7 trillion. To help minimize losses for investors, between November 2019 and September 2020, the financial authorities focused on closely examining fund assets managed by Lime Asset Management, drawing up a redemption plan for investors and setting up a new fund manager (Well Bridge Asset Management) to take over funds from Lime Asset Management. As such, the FSC also ordered a transfer of some 215 funds currently managed by Lime Asset Management to Well Bridge Asset Management effective from December 3, 2020. * Please refer to the attached PDF for details.
Attachment 1
Nov 30, 2020

FSC to Work on Revisions to Insurance Business Act for Implementation of IFRS 17 in 2023

Vice Chairman Doh Kyu-sang held a virtual meeting on November 30 to discuss ways to improve rules on insurance businesses in preparation for the implementation of IFRS 17 in 2023. At the meeting, Vice Chairman Doh announced the FSC’s plans to introduce a revision bill to the Insurance Business Act to the National Assembly during the first half of 2021.The International Accounting Standards Board (IASB) announced the finalized amendments to IFRS 17 in June and decided on a new effective date from 2023. In order to ensure a seamless implementation of IFRS 17, the FSC will set up and operate a task force charged with drawing up specifics of the revision to the Insurance Business Act to reflect the changes in accounting standard and prepare measures to support insurers with their capital reinforcement.The implementation of IFRS 17 will help improve the financial soundness and transparency of insurance businesses. The new accounting standard from IFRS 17 is expected to have a wide-ranging impact on the management of insurance businesses with respect to the development of new insurance policies, sales strategies, risk management, performance assessment, etc.The FSC expects that the implementation of IFRS 17 will provide an impetus for insurance businesses to seek more innovative management solutions and sustainable growth strategies.* Please refer to the attached PDF for details.
Attachment 1
Nov 26, 2020

FSC to Work on Preventing Economic Shocks and Managing Financial Market Risks

Vice Chairman Doh Kyu-sang held the 30th financial risk assessment meeting via teleconference on November 26 to check the implementation of the COVID-19 emergency financial support programs. At the meeting, Vice Chairman Doh also discussed the current financial market conditions and potential risks, credit lending in the banking sector and the government’s plans to extend the period of support available for vulnerable debtors.The following is a summary of Vice Chairman Doh’s remarks.(CURRENT ECONOMIC CONDITIONS) In November, consumer confidence and business survey index rose while exports increased for a second consecutive month. KOSPI rose to a record high of 2,617.76 points on November 24 on strong foreign net buying. The corporate bond and short-term money markets also show signs of stability. The low-rated corporate bond and CP purchase program (SPV) launched in July helped to improve market conditions. While considering the past performance and market conditions, the FSC will decide in December whether to extend the operation of the SPV beyond its initial six-month period.(POTENTIAL MARKET RISKS) The Korean economy and domestic financial markets have shown speedy recovery from the pandemic due to the government’s aggressive stimulus programs and abundant liquidity supply. However, household loans have expanded more rapidly in that process. Amid an ultra-low rate environment, high-yield hunting in stock and real estate markets and more recently in cryptocurrencies may pose risks. The resurgence of COVID-19 infection cases throughout the world may hold back economic recovery and the uncertainty surrounding major economies’ stimulus measures also pose risks. Against this backdrop, the FSC will work to ensure an effective management of household debt and closely monitor the flow of capital into high-risk assets.(RECENT TRENDS IN CREDIT LENDING) Since the FSC announced the measures to curb credit lending on November 13, the growth of credit loans in the bank
Attachment 1
Nov 26, 2020

Deferment of Principal Payment for Vulnerable Debtors to be Available for Six More Months

The FSC and other relevant institutions decided to make available the deferment of principal payment programs for vulnerable debtors for six more months until the end of June 2021 due to concerns about a protracted pandemic situation. (PRE-WORKOUT BY LENDING INSTITUTIONS) Credit loan and microloan users experiencing a diminished debt servicing capacity due to a drop in income amid COVID-19 may apply for a pre-workout program (deferment of principal payment) for six to twelve months at the originating lending institution until June 30, 2021.(DEBT ADJUSTMENT BY CCRS) The current deferment of principal payment (one-year maximum) offered by the Credit Counseling Recovery Service for those who have seen their income drop due to COVID-19 will be made available on a more regular basis from December 1, 2020. (INDIVIDUAL DEBT PURCHASE BY KAMCO) The Korea Asset Management Corporation (KAMCO)’s debt purchase program will help purchase unsecured debt accrued between February 1, 2020 and June 30, 2021. Both lending institutions and debtors may apply during this period.* Please refer to the attached PDF for details.
Attachment 1
Nov 25, 2020

FSC Holds Meeting on Future Outlook and Competitiveness of Financial Industry

The FSC held a meeting on the future outlook and competitiveness of the financial industry chaired by Vice Chairman Doh Kyu-sang on November 25. A new twelve-member expert review committee has been set up to lead the future outlook and competitiveness assessment of the financial industry. It will focus on lowering entry barriers into the financial industry and building financial infrastructures appropriate for the 4th industrial revolution era.VICE CHAIRMAN’S REMARKS(CHANGING ENVIRONMENT TASKS) The financial industry in Korea has continued to grow over the past decade. The size of Korea’s financial and insurance industry rose from 5 percent of GDP in 2009 to 5.6 percent of GDP in 2019, and the market capitalization of Korea’s capital markets rose to the twelfth in the world. However, there need to be more efforts to bring about qualitative improvements in the areas of global competitiveness and digital innovation. In response to an aging population and the low-rate and low growth environment, it is necessary to look for innovative solutions. With AI, big data and platform-based services being introduced by fintechs and big techs, it is necessary to accelerate digital transformation and gain consumer trust. The 4th industrial revolution has led to the blurring boundaries between financial and non-financial services, the unbundling of manufacturing and sales and the acceleration of the big blur where consumer experience is becoming ever more important.(ASSESSING THE COMPETITIVENESS OF FINANCIAL INDUSTRY) The future outlook and competitiveness assessment should focus on forecasting the future of the financial industry and looking for appropriate strategies based on long-term perspectives. It should offer an objective analysis on the current status of Korea’s financial industry, while checking to see whether the current regulations on entry and sales requirements are appropriate for the advancement of digital finance and innovation.FUTURE OUTLOOK COMPETITIVENESS
Attachment 1