Bill would allow ICT companies to sell funds

ICT companies may be allowed to sell financial products through their online platforms, such as KakaoTalk, as part of efforts to stimulate the country’s sluggish financial market, sources told the JoongAng Ilbo exclusively.

A special task force was launched recently consisting of financial regulators, including those from the Financial Services Commission and the Financial Supervisory Service, and representatives from the banking, investment and insurance industries.

In cooperation with the ruling Saenuri Party, the team has completed a draft for a new bill on easing regulations on selling funds, a product currently only sold by banks and brokerage firms.

Under the draft legislation, post offices and savings banks would be allowed to sell any kind of funds, as well as ICT firms in the case of so-called “online-only funds” - those sold through online platforms only.

In addition, brokerage firms would be allowed to sell general deposit and installment savings products, which are now exclusively sold by banks. With the proposed changes, customers will be able to open a single account with brokerage firms that performs a variety of purposes, such as deposits, buying funds and investments.

Under the new regulations, financial institutions could develop a variety of new products, but they would be required to set a cap on maximum losses, the sources said.

Holders of an Individual Savings Account (ISA) - an account that manages various financial products and that will be introduced next year - will enjoy a tax cut if they withdraw money in a certain amount each month instead of as a lump sum, when their savings reach a certain expiration date. After expiration, if ISA holders transfer their money to a “pension savings account,” - an account that the money in financial markets and earns a certain amount of money after retirement - more tax benefits will be offered.

The ruling party is eager to promote the ISA, saying the government should allow access to anyone regardless of their income and offer more tax exemptions, according to the sources.

Through negotiations with the ruling party and the Ministry of Strategy and Finance, the FSC will release a final draft of the bill within this month, sources said.

“In the process of working on the draft, we reached consensus on developing a new system and financial products that people can trust and easily access to increase personal wealth,” said an official in finance sector. “One of key factors for that was that we shouldn’t generate a lot of losses under a new system.”

The FSC, however, denied the report in an official statement Friday, saying it has made no such a draft yet and is just asking the opinions of various specialists.

BY LEE TAE-KYUNG, LEE SEUNG-HO [kim.heejin@joongang.co.kr]