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Regulators vow deregulation for new growth engines in finance

Nov. 3, 2021 - 15:07 By Choi Jae-hee
FSC Chairman Koh Seung-beom, sixth from left in front row, poses for a photo with the heads of the nation’s major insurance companies after a meeting held at Lotte Hotel Seoul on Wednesday. They included Kyobo Life Insurance CEO Yoon Yeol-hyun (third from left in front row), Samsung Life Insurance CEO Jeon Young-mook (fourth from left in front row), Shinhan Life Insurance CEO Sung Dae-kyu (sixth from left in second row), NongHyup Life Insurance CEO Kim In-tae (fifth from left in second row), Hanwha General Insurance CEO Kang Sung-soo (second from left in second row) and DB Life Insurance CEO Kim Young-man (first from left in front row). (FSS) / Finance industry leaders pose for a photo after a meeting at the Korea Federation of Banks headquarters in central Seoul, Wednesday. From left are DGB Financial Group Chairman Kim Tae-oh, JB Financial Group Chairman Kim Ki-hong, Hana Financial Group Chairman Kim Jung-tai, FSS Gov. Jeong Eun-bo, KB Financial Group Chairman Yoon Jong-gyu, Woori Financial Group Chairman and CEO Son Tae-seung, NongHyup Financial Group Chairman Son Byung-hwan and BNK Financial Group Chairman Kim Ji-wan. (FSC)
The chiefs of South Korea’s two main financial regulators -- the policymaking Financial Services Commission and the market watchdog Financial Supervisory Service -- have met with the heads of major insurance companies and banking groups here to discuss policy initiatives to support the growth of market players through deregulation, the two said Wednesday.

“The rapid digital transformation of finance and the growth of online platform businesses are rapidly changing the nation’s industrial landscape,” said FSC Chairman Koh Seung-beom during a meeting with the heads of the nation’s leading insurance firms, including Kyobo Life Insurance, Samsung Life Insurance, Hanwha Life Insurance and Shinhan Life Insurance. “(The FSC) will offer a regulatory waiver so that insurance companies can foray into new business areas.”

The authority, for instance, will grant approval for insurance companies to offer electronic prepayment services, whereby customers buy prepaid debit cards. It also plans to expedite approval procedures for the launch of insurance company subsidiaries that offer new services such as digital health management solutions, Koh added. 

To boost the digital transformation of the insurance sector, the FSC will encourage the insurers to join the so-called “open banking system” launched by the government in December 2019, which enables bank customers to use the services of different banks via a single smartphone application.

Meanwhile, FSS Gov. Jeong Eun-bo vowed deregulation to enable financial holding firm subsidiaries to share customer information with each other for business purposes, with the customers’ consent. 

Currently, the exchange of customer information within a financial group is not allowed under the nation’s Banking Act, largely due to a massive data leak in 2014 when some 100 million clients of three card issuers -- KB Kookmin Card, NH NongHyup Card and Lotte Card -- had their personal data disclosed inadvertently. The data included bank account numbers, addresses and credit ratings.

Jeong also hinted at easing oversight standards for local financial institutions, saying, “The FSS’ current scheme regarding its inspection activities will be reorganized with a focus on proactive approaches rather than disciplinary actions.”

The watchdog reportedly canceled a comprehensive inspection of Woori Financial Group and Woori Bank, slated for Nov.15, which would have looked at governance, internal control systems, financial stability and risk management policies.

Considering his inauguration message in August, when he said “the duty of financial supervision lies in support, not regulation,” the new FSS head is likely to roll back the hard-line policy direction of former chief Yoon Suk-heun, who revived the FSS’ authority to conduct comprehensive inspections in 2018, according to industry sources. The FSS’ then-Gov. Zhin Woong-seob suspended that authority in 2014.