Press Releases - Financial Services Commission

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Apr 29, 2020

Accounting Day Designated by Law To Commemorate Importance of Transparency in Accounting

The amendment to the Act on External Audit of Stock Companies passed the National Assembly on April 29, which officially designates October 31 the accounting day for commemorating the value and importance of transparency and celebrating the work of accountants.Every year since 2018, an accounting day commemoration event was held on October 31, organized by the private sector associations and academia. With the revised law becoming effective one year after promulgation, the government will lead the organization of the accounting day commemoration event beginning in 2021.* Please refer to the attached PDF for details.
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Apr 29, 2020

FSC Extends Guidelines on Supervision of Financial Conglomerates for Another Year

The FSC approved the revisions to the best practice guidelines on the supervision of financial conglomerates on April 29 and decided to extend its implementation for another year. KEY REVISIONS► CAPITAL ADEQUACY ASSESSMENT: a) Combine the ‘risk concentration’ and ‘risk transfer’ categories into a single unified framework for assessing capital adequacy requirements, b) Allow the application of domestic industry standards when assessing capital adequacy for foreign branches► INTERNAL CONTROL SYSTEM: Require financial conglomerates to establish a group-wide internal control system and standards for which a group-wide consultative body can be established to oversee the process► DISCLOSURE RULES: Have financial conglomerates disclose their group-wide risks every quarter starting with the risk information as of the end of 2019► OTHERS: a) Specify the designation of financial conglomerates subject to supervision to those with domestic financial companies with total assets amounting to KRW5 trillion, b) Specify the process of exemption, c) Extend the implementation of the guidelines for another year (May 1, 2020 to April 30, 2021)FURTHER PLANSThe implementation of the best practice guidelines will be extended for another year from May 1, 2020 to April 30, 2021, The financial conglomerates will disclose their group-wide risks at the end of September 2020The FSC will promote efforts to legislate the supervision of financial conglomerates as recommended by the IMF’s Financial Sector Assessment Program report on Korea.* Please refer to the attached PDF for details.
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Apr 29, 2020

Revised FSCMA To Enhance Autonomy and Accountablity of Financial Investment Businesses

The revisions to the Financial Investment Services and Capital Markets Act passed the National Assembly on April 29, which change some of the major sales regulations into ex post regulations. The government expects that the revised law will boost the autonomy and accountability of financial investment businesses while bolstering their function of supplying venture capital and promoting innovation in the capital markets.KEY REVISIONS► CHINESE WALL REGULATION: Improve the coverage and efficiency of regulation by having ‘Chinese walls’ required for the information that may result in conflicts of interest, such as undisclosed information, customer’s asset management information, etc. - Require financial investment businesses to set up internal control standards to ensure that exchange of information is strictly blocked- Strengthen ex posto sanction by establishing a penalty provision to impose a fine for breach of regulations► CONSIGNMENT OF WORK: Allow more functions of financial investment businesses to be consigned to a third party and permit reconsignment with an agreement from the consigner- The financial investment business will be accountable for any issues arising from reconsignment to guarantee investor protection.► REPORTING RULE: For concurrent management of multiple financial investment businesses or engaging in incidental businesses, the current rule requires ex ante reporting to the FSS at least seven days before the commencement of the business. The revised rule changes this requirement to ex post reporting while also enhancing ex post supervision to ensure invetor protection.FURTHER PLANSThe revised law will go into effect one year after promulgation. The FSC will work to ensure that the relevant rules and regulations are in line with the amendments for a smooth transition to the new system.* Please refer to the attached PDF for details.
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Apr 29, 2020

Foreign Currency Asset Limits Raised for Insurance Companies

The revisions to the Insurance Business Act passed the National Assembly on April 29, which increase the cap on foreign currency assets for insurance businesses. The revisions will go into effect six months after promulgation.KEY REVISIONS► FOREIGN CURRENCY ASSET MANAGEMENT: The current cap on insurance companies’ management of foreign currency assets will be increased from 20~30 percent to 50 percent for both general and special accounts in order to grant more autonomy in asset management.► ADEQUATE UNDERSTANDING BY CONSUMERS: Under the current law, insurance policies are the only document subject to evaluation to see how well consumers understand the documents. The revised law will also include pre-contractual information package to ensure more adequate understanding of insurance policies by consumers.► PENALTY RULES: For the failure of notifying consumers the right to request a lowering of interest rates, the revised law will impose a fine on the insurance company, not on the board members of the company to make the penalty rules more equitable with those of savings banks and credit finance businesses.* Please refer to the attached PDF for details.
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Apr 29, 2020

Revised Law Paves Way To Create Bailout Fund for Key Industries

The revisions to the Korea Development Bank Act passed the National Assembly on April 29, establishing a legal foundation to launch a bailout fund to help key industries struggling from the COVID-19 pandemic.KEY PROVISIONS► SUPPORT TARGETS: Businesses within industries that are considered crucial to the real economy, stability of the job market and national security, such as defense industry, industries barred from foreign investment, industries crucial for emergency resources, key technology industries, essential public service providers, etc. ► FINANING FOR FUND: KRW40 trillion state-guaranteed bond issuance► CONDITIONS: Aid recipients shall be subject to following requirements—a) both the management and employees will work toward maintaining employment, b) aid-receiving businesses shall come up with own funding sources within a 20 percent of the amount of aid, and c) businesses shall work to improve management while refraining from diviend payouts, share buybacks and executive compensation.► MANAGEMENT: a) Aid will be provided through loans, payment guarantees and investments according to the specific needs of industries and businesses, b) The fund shall be managed by the Korea Development Bank for five years until December 31, 2025, and a council shall be established at the KDB to ensure professionality, accountability and transparency of the fund management.FURTHER PLANSThe revisions to the Korea Development Bank Act are extected to take effect in May. The government will work on the changes to the relevant rules and regulations and draw up specific standards for aid provision to ensure prompt delivery of support to the businesses in need.* Please refer to the attached PDF for details.
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Apr 28, 2020

Government Adopts Revised Rules to Facilitate Effective Delivery of Emergency Relief Payments

The government approved a revision to the Enforcement Decree of the Electronic Financial Transactions Act during a cabinet meeting on April 28 to help facilitate a more effective and convenient way of delivering emergency relief payments to households.The revision raises the cap on the maximum value of prepaid electronic cards issued by the central and regional governments to up to KRW3 million until September 30, 2020.The increased cap is applicable only in the case of providing emergency relief payments by the central and regional governments in response to crisis situations, such as the COVID-19 pandemic.Along with the revision to the Enforcement Decree of the Specialized Credit Finance Business Act announced last week, this will help expedite the provision of emergency relief payments to households.* Please refer to the attached PDF for details.
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Apr 27, 2020

Deferment of Principal Payment Available for Vulnerable Debtors

The FSC announced on April 27 that deferment of principal payment will be available for vulnerable debtors who are unable to service debts due to diminished income caused by the COVID-19 pandemic. It will be offered by all financial institutions from April 29 until the end of this year.PROGRAMSBased on the situation of individual debtors, either a pre-workout program or a debt adjustment program is available.(PRE-WORKOUT BY FINANCIAL INSTITUTIONS) Microfinance loan users should apply for deferment of principal payment from the original lending institutions. Debtors without multiple debts are also able to apply at the lending institutions.Individual debtors whose diminished income minus living expenses is lower than monthly debt payment can apply for a deferment of principal payment for six to twelve months with no extra fees.(DEBT ADJUSTMENT BY CREDIT COUNSELING RECOVERY SERVICE) Debtors with multiple debts can apply for deferment of principal payment through a debt adjustment program at the Credit Counseling Recovery Service.Individual debtors with multiple debts whose net property value is less than the amoun ot total debts can apply for a deferment of principal payment for six to twelve months. Long-term debtors with three or more months of overdue payments may also be eligible for a debt relief program which offers 10~70 percent of debt cancellation.* Please refer to the attached PDF for details.
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Apr 27, 2020

FSC Finalizes Measures to Improve Regulatory Framework on Private Equity Funds

The FSC and the FSS announced the finalized measures to improve the regulatory framework on private equity funds on April 24. The final measures are based on the previously introduced plans on February 14, and take into account opinions from experts and stakeholders. While ensuring the autonomy of private equity funds, the measures aim to establish market disciplines and introduce a minimum necessary level of regulations to protect investors and prevent system risks.BACKGROUNDThe private equity fund market has grown significantly backed by the government’s policy promoting its development. However, concerns over investor protection became an issue due to problems of misselling, liquidity management and other unfair and/or unlawful sales practices. Against this backdrop, the government introduced on November 14, 2019 its plans to strengthen investor protection with high-risk investment products to prevent excessive consumer damages to retail investors. Between November 2019 and January 2020, the government conducted a study on the private equity fund market to check potential risks and vulnerabilities, and announced a set of improvement measures on February 14. Based on the previous announcements and after taking into account various expert opinions, the government prepared the below finanlized measures to improve the regulatory framework on private equity funds.KEY MEASURESThe basic principles of the improvements are largely in line with the previously announced changes with further details added thereafter.I. STRENGTHENING RISK MANAGEMENT BASED ON MARKET DISCIPLINESThe government will work to establish a foundation in which different market participants and players can provide a supervisory role and ‘checks and balances’ against one another.II. IMPROVING INVESTOR PROTECTIONThe FSC will address vulnerabilities in the structure of funds with a minimum necessary level of regulatory measures to improve investor protection.III. STRENGTHEN SUPERVISION AND INSPECTIO
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Apr 27, 2020

Extension of Reporting Deadline Available for Companies Affected by COVID-19

The financial authorities announced on April 24 their decision to temporarily lift administrative sanctions for companies that are unable to meet the quarterly and semi-annual reporting deadline due to COVID-19 related issues.For the companies that have already been granted exemptions from sanctions, the deadline has been extended until May 15. The authorities will accept additional applications for exemption from sanctions between April 27 and 29. Based on the review of applications, the Securities and Futures Commission will then decide to adopt an additional 30-day extension of deadline when the commission meets for a regular meeting on May 6.* Please refer to the attached PDF for details.
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Apr 23, 2020

Vice Chairman Emphasizes Crucial Role of Financial Institutions in Supporting Key Industries

FSC Vice Chairman Sohn Byungdoo held a meeting with officials from banks and financial associations on April 23 and held talks on the government’s recently announced measures to temporarily ease financial regulations and to provide additional liquidity to support key industries and help businesses retain jobs.Vice Chairman Sohn explained about the plans to set up a KRW40 trillion stabilization fund to support the country’s key industries, including airline, shipping, shipbuilding, auto and telecommunication industries, and to expand the emergency liquidity support by KRW35 trillion for small merchants and other business entities.With regard to the temporary easing of financial regulations, Vice Chairman Sohn said that the deregulatory measures on capital adequacy, liquidity and asset quality as well as other exemptions have freed up about KRW206 trillion to KRW394 trillion extra funding capacity across all financial sectors.Vice Chairman Sohn also spoke about the risk of investing in high-risk, high-yield financial products amid continuing uncertainy in the financial markets and warned against price fixing and other market manipulation behaviors.The participants agreed on the crucial role of financial institutions in ensuring a smooth implementation of the government’s emergency support funds and vowed to play an active role in providing support to businesses.* Please refer to the attached PDF for details.
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Apr 22, 2020

Government Announces KRW40 Trillion Fund to Support Key Industries

The government introduced measures to establish a KRW40 trillion fund to support key industries and help businesses retain jobs on April 22. In addition, the government will help provide more liquidity to the businesses in need through a KRW35 trillion increase in the emergency financial support package.KEY PROVISIONSI. ESTABLISHING A KRW40 TRILLION+ STABILIZATION FUND FOR KEY INDUSTRIES► SIZE: A KRW40 trillion+ new stabilization fund will be established to support key industries, which will be operated by the Korea Development Bank. The fund will be raised by issuing state guaranteed fund bonds. In addition, private funds and special purpose vehicles will also contribute to the stabilization fund.► TARGET: The fund will support key industries that have significant impact on employment and the real economy, including airline, shipping, shipbuilding, auto, general machinery, electric power and communication industries.► CONDITION: (a) The autonomy in business management will be guaranteed in principle based on the condition of self-rescue efforts. (b) Businesses will be required to work on maintaining employment when receiving the support. (c) Businesses will be subject to limitations in executive compensation, dividend payouts, and share buybacks. (d) The support will be provided in a way that allows sharing of benefits from business normalization in the future.► OPERATION: (a) Support will be provided in diverse ways through loans, payment guarantees and investments according to specific industry and business needs. (b) Investment and credit extension to related funds and special purpose vehicles will be permitted to promote inputs from private sector funding channels and their know-hows. (c) A council will be set up to ensure professionality, accountability and transparency of the fund management.II. EXPANDING EMERGENCY FINANCIAL SUPPORT PACKAGE BY KRW35 TRILLION► FINANCING SUPPORT FOR SMALL MERCHANTS (KRW10 TRILLION): The 1st stage financing support mad
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Apr 22, 2020

Vice Chairman Calls for Enhanced Monitoring of Corporate Bond Markets by FSB

FSC Vice Chairman Sohn Byungdoo participated in the Financial Stability Board’s steering committee meeting via conference call on April 21. At the meeting, the members agreed that the early signs of widespread anxieties in the financial markets have diminished due to policy responses from each country. Meanwhile, they raised concerns about the potential rise in solvency risk due to continuing uncertainty.At the meeting, Vice Chairman Sohn stated that the volatility in the financial markets appears to have stabilized in April. In order to prepare for the possibility of a further economic downturn, the FSB needs to strengthen monitoring of the corporate bond markets and derivatives markets.In addition, banks should implement more flexible lending rules on a par with the governments’ efforts at regulatory flexibility. However, lowering regulatory standards risks regulatory fragmentation across jurisdictions, which raises the possibility of regulatory arbitrage and threatens financial stability. In this regard, Vice Chairman Sohn suggested that the FSB and the international standard setting institutions should provide guidelines on the appropriate levels of regulatory flexibility.* Please refer to the attached PDF for details.
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Apr 21, 2020

Overall Resilience of Korea's Financial System Observed by IMF's FSAP

The International Monetary Fund published the Financial System Stability Assessment for Korea on April 21 in which it observed the overall resilience of Korea’s financial system.The FSSA report finds that the “Korean authorities have continued their efforts at upgrading the prudential, legal and supervisory framework for the financial sector,” and “have been strengthening the system with micro and macroprudential measures against vulnerabilities, strengthening the crisis management framework, and upgrading the prudential and legal framework.”The report also noted a few vulnerabilities, including “growth related uncertainties and elevated household debt,” and suggested twelve specific recommendations in four key policy areas.Classified as one of the twelve countries with systemically important financial sectors, the IMF’s Financial Sector Assessment Program (FSAP) conducts financial stability assessment on Korea every five years. Following previous assessments in 2003 and 2014, the current FSSA report is drawn from the conclusion of a FSAP mission which took place in 2019.* Please refer to the attached PDF for details.
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Apr 21, 2020

FSC Revises Rules to Help Expedite Emergency Relief Payments to Households

A revision to the Enforcement Decree of the Specialized Credit Finance Business Act was approved at a cabinet meeting on April 21. It raises the cap on the face value of non-personalized prepaid cards from KRW500,000 to KRW3 million until September 30, 2020.The application of the increased cap is limited to the purpose of providing emergency relief payments via non-personalized prepaid cards by the central and regional governments in response to crisis situations, such as the COVID-19 pandemic, with specific recipients, usable places and expiry dates predetermined.As the government is preparing to provide emergency relief payments to households, this revision is expected to facilitate the prompt and effective provision of the relief to the households in need.* Please refer to the attached PDF for details.
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Apr 20, 2020

Plans for Temporary Easing of Financial Regulations in Response to COVID-19

The financial authorities announced on April 17 a set of temporary deregulatory measures on financial institutions’ capital adequacy, liquidity and asset quality requirements to help boost their financing capacity amid the COVID-19 crisis. The deregulatory measures are expected to pave the way for financial institutions to play a more active role in providing support to the real economy.BACKGROUNDThe international society including the G20 and the Basel Committee on Banking Supervision recognized the need for a more flexible application of financial regulations in response to COVID-19. The adoption of the Basel III standards in the aftermath of the 2007-2008 financial crisis has boosted the stability of financial institutions in crisis situations. But it also had an effect of constraining their ability to flexibly respond to crisis situations. Against this backdrop, the Financial Stability Board recently made a recommendation for more flexible application of regulations.In response to COVID-19, the Korean government has made available more than KRW100 trillion in financing support via financial institutions. The financial institutions at the forefront of delivering this emergency support package to businesses have been requesting an easing of such regulations so that they can increase their financing capacity to help support the real economy.TEMPORARY EASING OF FINANCIAL REGULATIONSThe deregulatory measures will be based on the four key principles—necessity, temporariness, promptness and effectiveness.I. REGULATIONS ON CAPITAL ADEQUACY► CONTRIBUTION TO STOCK MARKET STABILIZATION FUND: Banks, securities companies and insuance companies that are making contributions to the stock market stabilization fund will see lower risk weights for the amount of contribution they make.(Banks) Under the current regulations, banks’ investment in funds that have listed stocks as underlying assets should be assigned a 300 percent risk weight in principle. However, banks will b
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Apr 17, 2020

Financial Authorities to Temporarily Ease Regulations on Capital and Liquidity Requirements

FSC Vice Chairman Sohn Byungdoo held a meeting on April 17 via conference call to check the delivery of the government’s COVID-19 emergency support package and financial market stabilization measures.The following is a summary of Vice Chairman Sohn’s remarks:► STRONG COOPERATION: The FSC and the FSS along with all other relevant institutions will closely cooperate in working to prevent bankruptcies and job lossess. ► ENSURING SEAMLESS IMPLEMENTATION: For guaranteed loans, the guarantee institutions had different standards for offering deferments on the principal payment. Due to an improvement in the standards, this discrepancy has been removed.► EASING REGULATIONS: In order to make sure that financial institutions providing the COVID-19 emergency support package do not face liquidity shortages, the government will temporarily ease regulations on the capital and liquidity requirements, while also working to improve the performance assessment measures for public financial institutions.FINANCIAL SUPPORT PROVIDEDBetween February 7 and April 13, a total of KRW40.9 trillion (488,000 individual cases) in loans and guarantees as well as loan and guarantee extensions were provided to the SMEs, small merchants and self-employed business that have been hit by the spread of COVID-19.► FINANCING BY TYPE: KRW19.6 trillion (352,000 cases) in new loans and guarantees, KRW19.9 trillion (120,000 cases) in maturity extensions and deferred payments, and KRW1.4 trillion (16,000 cases) in export-import credit finance, discounted interest rates and late fees and deferment of interest payment► FINANCING BY TARGET: KRW19.4 trillion (424,000 cases) to small merchants, KRW17.1 trillion (64,000 cases) to SMEs and KRW4.5 trillion (594 cases) to middle market enterprises► FINANCING BY INDUSTRY: KRW5.6 trillion (56,000 cases) to wholesale businesses, KRW3.8 trillion (111,000 cases) to restaurant businesses and KRW3.6 trillion (82,000 cases) to retail businesses► FINANCING BY PRO
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Apr 17, 2020

FATF Report Finds Korea Has Strong Legal Framework for AML/CFT Regime

The Financial Action Task Force published the 4th round mutual evaluation report on Korea’s anti-money laundering and counter terrorist financing (AML/CFT) regime on April 16. The mutual evaluation report finds that “Korea has a sound legal framework to tackle money laundering and terrorist financing and to confiscate funds involved,” and “has significantly strengthened its AML/CFT framework which is now delivering good results.” The mutual evaluation process began in January 2019 with a field visit for due diligence taking place in July last year. After a six-month cooperation, the mutual evaluation report was adopted during the FATF plenary meeting in February 2020.* Please refer to the attached PDF for details.
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Apr 16, 2020

FSC Approves Revised Rules on Misconduct in Financial Services

The FSC decided to adopt the revised rules and regulations for the examination and sanctions on financial institutions on April 16 as a follow-up measure to the plans to improve the rules on exemption for misconduct in financial services announced in the previous week.RULES ON EXEMPTION FROM SANCTIONS The revisions are intended to guarantee exemptions from sanctions for financial services workers, and by doing so, to help encourage them to play a more active role in offering loans and other financial support to the businesses and individuals in need during the COVID-19 pandemic as well as in other crisis situations.The revised rules and regulations include an ex ante provision to ensure that the exemption from sanctions will be applied to the possible misselling or misconduct cases that have occurred prior to the adoption of these changes.REQUEST FOR REGULATORY INTERPRETATION AND NO-ACTION LETTERThe FSC also decided to allow financial institutions to anonymously submit requests for regulatory interpretation and no-action letter from April 16. Until now, financial institutions faced obstacles as they were only able to file requests with the company name and the name of the company representative.From April 16, financial institutions will be able to submit requests anonymously via online at http://better.fsc.go.kr and by providing only their contact information such as a telephone number and an email address.* Please refer to the attached PDF for details.
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Apr 13, 2020

Application Opens for Participating Businesses to 2020 Korea Fintech Week

The application for the 2020 Korea Fintech Week is open from April 13 to 24 for prospective participants wishing to showcase their fintech products and innovative services via virtual exhibition halls.The FSC has decided to hold the 2020 Korea Fintech Week as a virtual expo from May 28 due to public health concerns amid the COVID-19 crisis. Under the theme of “Fintech for Open Innovation,” the virtual expo will feature online seminars for information sharing on the latest trends of the fintech industry as well as the five virtual exhibition halls for about 150 fintech and other related services.The five virtual exhibition halls will be organized into a fintech start-up hall, a fintech scale-up hall, a big tech hall, a financial enterprise hall and a global enterprise hall.While there are no participation fees, participating companies need to prepare their own digital promotional materials.Application will be accepted from Monday, April 13 until Friday 6:00 pm, April 24. Prospective participants should download the application form from www.fintechcenter.or.kr and submit their applications along with supporting materials via email at fintechweek@fintechcenter.or.kr.The results of the application will be announced on Friday, May 1 for the fintech start-up hall and on Friday, May 8 for all other exhibition halls.The government plans to provide active support to fintech firms with their overseas business opportunities by inviting financial authorities from other countries and embassy officials to the virtual expo.* Please refer to the attached PDF for details.
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Apr 13, 2020

Authorities Recommend Flexibility in Accounting Standards amid COVID-19 Crisis

The FSC and the FSS issued a guidance on April 10 recommending companies and auditors against a mechanical application of IFRS 9 standards for determining their expected credit losses (ECLs) during the COVID-19 crisis.As companies and auditors are preparing their quarterly reports and audit reports for the first quarter, there have been concerns over the looming uncertainty about how to determine the amount of ECLs due to the COVID-19 pandemic.In this regard, both companies and auditors are highly advised to consider the unprecedented financial and economic relief measures taken by the government in a comprehensive way when determining ECLs. Ordinarily, the government’s market support measures are expected to lower the risk of a default on a financial instrument.With regard to the impairment of financial instruments, IFRS 9 “requires that lifetime ECLs be recognized when there is a significant increase in credit risk (SICR) on a financial instrument” and “requires the application of judgement and both requires and allows entities to adjust their approach to determining ECLs in different circumstances.”The International Accounting Standards Board (IASB) has recently issued a statement in this regard on March 27, recommending entities to adopt a more flexible approach when recognizing the impairment of financial instruments due to high levels of uncertainty amid the COVID-19 crisis.* Please refer to the attached PDF for details.
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