Press Releases - Financial Services Commission

Press Releases

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May 01, 2020

FSC To Work on Improvements To Financial Education Programs

Vice Chairman Sohn Byungdoo presided over the first financial education council meeting on April 29, in which the council decided on the plans for improving financial education.BACKGROUNDA new legislation on financial consumer protection adopted by the government on March 17, 2020 establishes a legal foundation to provide financial education to consumers. Over the years, financial education has become more widely available in Korea as household debt levels increased and personal asset management became more important amid aging society and prolonged low interest rates.Against this backdrop, the FSC carried out surveys and focus group interviews last year to assess current situations, and the results revealed that despite wide availability of financial education, the quality of educational contents, delivery channels and instructors has been lagging. Thus, the council on financial education plans to work on improving the organization and effectiveness of financial education through an enhanced level of cooperation between the public and private sectors.PLANS FOR IMPROVING FINANCIAL EDUCATION► CONTENTS: a) Design a set of financial literacy indicators to help develop and manage educational contents in a more systematic way, b) Draw up plans for contents development every year to maintain the timeliness of the contents, c) Ensure credibility through a contents certification system► CONTENTS DELIVERY CHANNELS: a) Make sufficient class spaces available for financial education throughout the country, b) Set up an online one-stop contents site which offers answers to the finance-related questions in everyday life, c) Make educational contents available through different platforms based on the different needs of consumers► INSTRUCTORS: a) Work on establishing a more systematic management of professional instructors, b) Make training programs more widely available for school teachers► EDUCATIONAL METHODS: Promote diverse educational programs based on the needs of dif
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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

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 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 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 10, 2020

Financial Regulators Issue Investor Alert on COVID-19 Related Stocks

The financial regulators issued an investor alert on April 10 on a set of 69 stock items related to COVID-19 including masks, test kits, vaccines and other sanitary and disease prevention items due to high fluctuations in prices and concerns over possible damages to investors.Investors are advised to be aware of the possibility of incurring losses especially when investing in stocks for test kits or vaccines as their bullish prices tend to fall abruptly.Investors should also watch out for unconfirmed information about the development schedule of vaccines or the effectiveness of similar medicines circulating on the stock market bulletin boards, the internet or through text messaging system.The financial authorities will strengthen the market monitoring and supervisory functions to prevent unfair trading practices in the capital markets, such as the spread of false information and/or exaggerated announcement of business plans.* Please refer to the attached PDF for details.
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Apr 08, 2020

Household Loans, March 2020

The outstanding balance of household loans in all financial sectors rose KRW9.1 trillion (up 5.6% year-on-year) at the end of March 2020.By types, mortgage loans increased KRW5.2 trillion in March (up 5.5% year-on-year). Regular mortgage loans, jeonse loans and group lending expanded KRW6.3 trillion in the banking sector, while non-banks saw a drop of KRW1 trillion due to the availability of refinancing products with lower interest mortgage loans. Other types of loans rose KRW3.9 trillion (up 5.6% year-on-year) due to a rise in credit lending.The government will closely monitor trends in household loans as the outstanding balance of household loans by financial institutions is expected to increase in April due to a rising demand for loans amid the COVID-19 pandemic.* Please refer to the attached PDF for details.
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Mar 31, 2020

Vice Chairman Speaks on Importance of Removing Information Barriers for Policy Cooperation

FSC Vice Chairman Sohn Byungdoo attended the Financial Stability Board’s first plenary meeting this year via a conference call on March 30. During the meeting, the members discussed their policy responses to the COVID-19 outbreak as well as adjustment to the FSB’s work priorities for this year.In order to restore stability in the global financial markets, Vice Chairman Sohn emphasized that international cooperation has now become more important than ever. To that end, the Vice Chairman spoke about the need to remove information barriers that currently exist between the FSB standing committees in order to establish a more effective framework for policy cooperation. Vice Chairman Sohn also underscored the need for international standard setting bodies, such as the Basel Committee on Banking Supervision, to establish certain guidelines to promote regulatory flexibility.* Please refer to the attached PDF for details.
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Mar 30, 2020

Peer-To-Peer Lending Cap to be Lowered to Provide Investor Safeguards

The FSC and the FSS announced on March 27 their decision to lower the peer-to-peer lending cap through supervisory guidance from the previously set amount of KRW50 million to KRW30 million per year. For real estate investment products, the P2P lending cap will be lowered to KRW10 million from KRW30 million.The decision was made amid growing concerns about damages to investors due to the possibility of an increase in defaults and delinquencies in the wake of the COVID-19 crisis.The changes in the lending cap apply to retail investors and take into consideration public comments since the enforcement decree of the Act on Online-linked Financing was announced on January 28.The government plans to gradually adjust the lending cap in the future, while promoting the sound development of the P2P lending industry and investor protection.* Please refer to the attached PDF for details.
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Mar 27, 2020

KAIST Selected as Digital Finance Education Provider for 4 Years

The Financial Services Commission and the Seoul Metropolitan Government announced on March 25 that the Korea Advanced Institute of Science and Technology (KAIST) along with its consortium members have been chosen as the designated digital finance education provider.In the second half of this year, KAIST will begin to offer both degree (2-year) and non-degree (5-month) programs to cultivate more professionals in the area of digital finance, providing courses on big data, cloud computing and artificial intelligence, etc.For the next four years, KAIST will provide curriculums on digital finance to current financial industry workers, prospective fintech entrepreneurs, fintech professionals and those that are aspiring for financial sector jobs.More specific information about curriculums and admissions will be provided by KAIST College of Business at a later date.* Please refer to the attached PDF for details.
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Mar 24, 2020

Reverse Mortgage Age Requirement to be Lowered

The revisions to the Enforcement Decree of the Korea Housing Finance Corporation Act were approved at a cabinet meeting on March 24. The revisions include the changes to the reverse mortgage age requirement and the introduction of a new security deposit payback guarantee program for renters.REVERSE MORTGAGEBeginning on April 1, 2020, the age requirement for homeowners or spouses of homeowners wishing to sign up for reverse mortgage programs will be lowered from 60 years old or older to 55 years old or older.The government expects that 1.15 million additional households will be eligible for reverse mortgages due to this change. Early retirees are expected to benefit from the 1.5 percent increase in the disbursement amount beginning in 2020.As of the end of February, 2020, the accumulated number of households signed up for reverse mortgages stood at 72,000 and the total amount of disbursement stood at KRW5.3 trillion.SECURITY DEPOSIT PAYBACK GUARANTEEBeginning in June, the Korea Housing Finance Corporation (HF) will offer a security deposit payback guarantee to the recipients of HF’s jeonse loan guarantees. This new guarantee service is expected to improve convenience and lower costs for consumers.* Please refer to the attached PDF for details.
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Mar 23, 2020

Government Issues Investor Alert for P2P Lending Products

With the Act on Online Investment-linked Financing scheduled to take effect on August 27, 2020, the volume of peer-to-peer lending has continued to grow as well as its default rate. Against this backdrop, the government has issued an investor alert to urge investors to use caution before investing in P2P loan products.Investors should be aware of the risks associated with P2P loan products as they are high-risk, high-yield products with no principal guarantee.The FSC will work to promote the development of a sound P2P lending ecosystem while closely monitoring the P2P lending firms’ compliance with the relevant guidelines to help minimize the information asymmetry existing in the market. For any unfair sales practices or incidents of fraud or embezzlement, the financial regulators will take stringent measures through on-site inspections.Note to Investors► P2P loan products are not principal guaranteed and investors are responsible for their losses on their investments.► Investors are advised to check whether P2P lending firms are registered with the FSC.► Investors are advised to check P2P lending firms' financial data and other relevant records prior to investing.► Investors should approach with caution P2P lending firms with excessive investment events.► Investors are advised to check the details of disclosed information when considering investment in P2P real estate lending.► P2P loan products are high-risk, high-yield products, thus investors are advised to follow small sum and dispersed investment strategies.* Please refer to the attached PDF for details.
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Mar 20, 2020

Vice Chairman Calls for Strengthening Information Sharing and Policy Cooperation

FSC Vice Chairman Sohn Byungdoo participated in the Financial Stability Board Steering Committee meeting which was held over a conference call on March 19, 2020. The steering committee meeting was held to check the effects of the COVID-19 outbreak in the global financial markets and share policy responses.The following is a summary of Vice Chairman Sohn’s remarks:The Korean government has been closely monitoring the effects of the COVID-19 outbreak on the financial markets. As the government has been working on preventive measures, the number of newly infected cases has declined. To minimize impact on the real economy, various policy tools have been applied from both the demand and the supply side. The Bank of Korea lowered the base rate to 0.75 percent and the government unveiled a KRW50 trillion additional financial support package.As capital outflows from emerging markets triggered foreign exchange market volatility, it is important to maintain stability through currency swaps between the U.S. and other countries.To minimize market instability, closer international cooperation and information sharing between countries are needed.* Please refer to the attached PDF for details.
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Mar 20, 2020

Government Prepares to Introduce Points-Based Personal Credit Scoring System

The FSC announced on March 19 that a new points-based personal credit scoring system will be introduced on January 1, 2021, which will replace the current ratings-based credit scoring system.BACKGROUNDThe government has been pursuing a shift from the current ratings-based system (1 to 10 ratings) to a points-based system (1 to 1,000 points) in order to minimize the threshold effect when applying for loans.1 Once the change takes effect, the credit bureaus will provide personal ‘credit grades’ instead of ‘credit ratings’ to individuals and financial institutions alike.Introducing the new points-based credit scoring system requires a revision of the term ‘credit ratings’ with ‘credit grades’ in all financial and other relevant laws. The government will work on the revision of the 11 finance-related laws and regulations to facilitate a seamless transition by January 1, 2021.KEY REVISIONThe specifics of the change from ‘credit ratings’ to ‘credit grades’ are shown below.The new points-based credit scoring system will provide a more segmented credit scoring system for both individuals and financial institutions.FURTHER PLANIn order to ensure a smooth transition to the new points-based credit scoring system,the government will operate a taskforce to closely monitor the transition. The necessary revisions to the legislations are expected to be completed by the third quarter of this year. The change from the ‘credit ratings’ to the ‘credit grades’ system for financial companies’ credit scoring system (CSS), guidelines, internal regulations and standardized agreements will take place in the fourth quarter. The new points-based credit scoring system will be fully operational beginning on January 1, 2021.* Please refer to the attached PDF for details.
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Mar 18, 2020

FSC Grants Viva Republica Preliminary License to Launch Brokerage Business

The FSC decided to grant Viva Republica (Toss) a preliminary license to operate investment brokerage business on March 18, 2020, as it has met the requirements of capital adequacy, appropriateness of business plan and soundness of management specified by the Financial Investment Services and Capital Markets Act.In six months, Viva Republica will be required to submit application for a final approval after getting its human resources and physical infrastructure ready. Viva Republica may begin its securities brokerage business within six months of getting the final approval from the FSC.* Please refer to the attached PDF for details.
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Mar 17, 2020

New Legislation on Financial Consumer Protection Approved at Cabinet Meeting

The new legislation on financial consumer protection was approved at a cabinet meeting on March 17, 2020. It will be promulgated in March and will become effective one year after in March 2021.1 The new legislation is a part of the government’s policy initiatives to improve the fairness in the economy.EXPECTATIONThe new legislation on financial consumer protection attempts to level the playing field between consumers and financial institutions. It represents a significant turning point as it will help enhance consumer rights and improve public confidence in financial institutions.I. CLOSING REGULATORY LOOPHOLES AND STRENGTHENING ADMINISTRATIVE MEASURES► The six major sales regulations2 currently applied to selected financial products will be applied to all financial products.► Strict punishment such as punitive fines3 will be imposed on violations of the sales regulations, and the government may issue a sales ban to prevent massive consumer damage.II. BOOSTING EFFECTIVENESS OF CONSUMER REMEDIES IN CONFLICT RESOLUTION AND LITIGATION► Financial firms will not be allowed to file a lawsuit for the purpose of leaving the conflict resolution process and avoiding mediation, and courts may decide to halt further legal process through a stay of proceedings if the lawsuit brought to them are unresolved conflict resolution cases.► The burden of proof in liability for damage cases will be transferred to the seller, and consumers will be entitled to the right to request information to be used in conflict resolution cases or lawsuits.III. EXPANDING CONSUMER CHOICES AND IMPROVING TRANSPARENCY► Consumers are entitled to the right to withdraw subscription within a certain period of time, and may resort to unilateral termination of contracts when violation of sales regulations is found.► Financial firms will be required to explain important information such as the risk levels of investment products, and also by law provide a comparative information of financial products
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Mar 13, 2020

FSC to Ease Rules on Overseas Expansion of Financial Institutions

The FSC announced on March 12, 2020 its plans to revise the regulations on overseas expansion of financial institutions in order to ease regulatory burdens of operating overseas businesses and help boost their global competitiveness. The amendments will include streamlining the registration and reporting process and easing unnecessary requirements. The revisions will take effect gradually within this year in a two-pronged process.KEY FEATURESThe first stage amendments to the regulations include a) an expanded application of the ex post facto reporting rule for foreign direct investment, b) an improvement to the regular reporting process, and c) a simplified reporting rule for dissolving overseas businesses.I. EX POST FACTO REPORTING RULE FOR FDI(As is) In principle, all financial institutions are required to report their foreign direct investment activities before overseas investment takes place.(To be) Allow ex post facto reporting of new foreign direct investment for financial institutions with cumulative investment in the amount of USD30 million or less during the recent year.The government will work to maintain the stability in the FX market by reviewing the soundness of overseas investment businesses and through the imposition of penalties for businesses deemed to be substandard.II. IMPROVEMENT TO REGULAR REPORTING REQUIREMENT(As is) Financial companies are required to report the status of the establishment and operation of their overseas businesses to both the Financial Supervisory Service and the Bank of Korea once every three months.(To be) Financial companies will report the status of the establishment and operation of overseas businesses to the FSS once every year.The information provided to the FSS will be shared with the Bank of Korea.III. EX POST FACTO REPORTING RULE FOR DISSOLVING OVERSEAS BRANCHES(As is) When seeking dissolution of overseas business operations or making changes to the initial declaration, financial institutions are required to report
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Mar 11, 2020

Household Loans, February 2020

The outstanding balance of household loans in all financial sectors rose KRW9.1 trillion (up 4.9% year-on-year) at the end of February 2020. The household loan balance increased KRW9.3 trillion in the banking sector (up 8.5% year-on-year) while declining KRW200 billion in the non-banking sector (down 0.7% year-on-year).By types, mortgage loans increased KRW6.9 trillion in February (up 5.0% year-on-year). Regular mortgage loans, jeonse loans and group lending expanded KRW7.8 trillion in the banking sector, while non-banks saw a drop of KRW900 billion due to the availability of refinancing products with lower interest mortgage loans. Other types of loans rose KRW2.1 trillion (up 4.8% year-on-year) due to a rise in credit lending.The government will closely monitor trends in household loans while implementing the mortgage loan regulations for homes valued higher than KRW900 million and managing credit lending through debt service ratio.* Please refer to the attached PDF for details.
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Mar 06, 2020

FSC Vice Chairman Highlights Importance of Financial Cooperation in Response to COVID-19

FSC Vice Chairman Sohn Byungdoo participated in a conference call of the Financial Stability Board Steering Committee meeting on March 5, 2020. The steering committee meeting was held to assess the effects of COVID-19 on the financial markets around the world and to share policy responses by the member countries.The following is a summary of Vice Chairman Sohn’s remarks.The financial markets in Korea remain stable, despite some signs of volatility at the beginning of the outbreak, due to the prompt responses from the government and the efforts by other countries.In order to maintain stability in the markets, the Korean government has been focusing on the following – a) taking preventive measures to contain the spread of COVID-19, b) drawing up financing support targeting the small merchants and SMEs hit by the virus outbreak as well as a supplementary budget to mitigate the economic impact of the virus, and c) strengthening market monitoring and establishing business continuity plans.Vice Chairman Sohn stated that an effective response will be difficult without close international cooperation, and called for a closer financial cooperation between countries through the FSB steering committee.* Please refer to the attached PDF for details.
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