FSC plans to roll back regulationsThe Financial Services Commission promised to overhaul the financial industry, including rolling back regulations significantly to make it easier for new financial businesses to enter the market in order to create more jobs.
FSC Chairman Choi Jong-ku on Monday reiterated that the Moon Jae-in administration is focused on reforming the financial industry to benefit consumers, particularly those that have been considered disadvantaged.
The financial authority will be rolling out specific reforms throughout the second half of the year, including the abolition of guaranteeing loans, which are considered to be part of an unfair system that has driven some people that have co-signed loans into poverty when the lender is unable to pay back the debt. This reform will be introduced later this month.
“Although financial companies have been operating on money provided by consumers, they have been reluctant in their efforts to find benefits that have been promised, and the way the prices have been set or the additional costs haven’t been transparent,” Choi said.
“The FSC has been pushing inclusive finance, and the premise for these policies to succeed is that the public trusts the financial industry,” the FSC chairman added.
He said the FSC will consistently overhaul the financial industry to secure consumers’ trust while strengthening the foundation that secures the competitiveness of the industry.
The FSC chairman said there’s a limit to creating jobs with existing financial companies and that there is a need to open the market to new players that could provide more quality jobs.
“We will reform the entry regulations including strengthening the support of policy finance [loans provided by state-run financial institutions] so that investments could be smoothly injected to productive areas and create jobs,” Choi said.
One of the changes is to simplify the approval process for new institutions. This includes the entry of internet-only banks, despite the regulation that limits nonfinancial companies from investing in banks.
“We don’t know when the regulations limiting nonfinancial companies’ investment in banks will be eased,” Choi said. “What we mean is that we will consider the participation of a third internet-only bank if there’s an interested party.”
The FSC chairman also said the government will be expanding policies to reform the capital market to encourage investments in innovative companies so that such start-ups could “scale up.”
“We will change the capital regulations so that the abundant liquidity floating in the market would be attracted not to households or in real estate, but in productive areas like innovative SMEs,” Choi said.
The FSC chairman noted that until now the capital market was focused mostly on increasing the profits of companies instead of contributing to the growth of the companies or investors’ profits.
“We will pursue innovation in the capital market with the determination that the success of our economic paradigm shift [where the increased benefits on consumers will eventually contribute to the overall growth] depends on the capital market [reform],” Choi said.
He also said the FSC will work on establishing a fair capital market order that is equivalent to that of global standards. This includes abolishing shadow voting to improve corporate governance structures while encouraging institutional investors to exercise their voting rights.
In exchange for rolling back regulations the government will impose stricter accountability by raising penalties on those that disrupt the market by manipulating the stock prices or through other illegal activities such as falsifying accounting records.
BY LEE HO-JEONG [email@example.com]
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