The Financial Supervisory Service stated in this year’s work plan that it will analyze and check the credit ratings of those who received financial support due to the prolonged Corona 19 and the possibility of insolvency by industry, and instruct the strengthening of provisions. This can be interpreted as preventing damage to the soundness of financial companies due to insolvency delays due to financial support.
On the 16th, the Financial Supervisory Service announced a work plan for 2021 that included these details. The Financial Supervisory Service said, “We will prepare for the accumulation of credit risk by borrowers due to the prolonged Corona 19 and lead the capital expansion to smoothly perform the function of financing in financial companies.”
In particular, he added, “We will continue to strengthen the monitoring and management of the soundness of the second financial sector.”
This seems to be a measure taking into account that the policy direction was originally set toward not extending additional measures to support Corona 19 financial support. Concerns are raised that if the measures are continued, loans to SMEs and small business owners in the financial sector may lead to insolvency. The loan maturity extensions made in policy financial institutions, commercial banks, and the second financial sector amounted to 110 trillion won as of early December 2020.
In addition, the Financial Supervisory Service has set its direction to continue financial support for Corona 19. To this end, it was decided to review financial support and re-extending measures to soften regulations, taking into account the prolonged corona19 and the occurrence of damage.
In order to prevent sudden shocks such as cliff effects when financial support is normalized, monitoring of the money market will be strengthened and a step-by-step soft landing plan will be prepared.
The FSS is also spurring the stabilization of the financial system. As the risk asset synchronization phenomenon in the work plan intensifies, the Kumanwon advances the system risk-related response system and promotes the efficiency of constant monitoring.
We will also focus on adjusting the financial environment. The Financial Supervisory Service announced that it will reorganize the business activity supervisory system in accordance with the Financial Consumer Protection Act, and that it will strictly respond to violations of the financial transaction order, such as incomplete sales.
In addition, it supports regulatory overhaul to ensure fair competition between large platform companies and financial companies in accordance with the principle of same function and same regulation.
In addition, the company decided to strengthen inspections on illegal short selling and improve the capability of investigating the special police to deal with securities crimes.
As a support for the crisis of the vulnerable, the financial safety net will be further expanded. In preparation for a cut in the highest interest rate, the Financial Supervisory Service supports low-credit borrowers in the use of financial institutions in the institutional sector, and induces the activation of mid- and low-credit loans.
Induce the development of customized financial products necessary for the financially vulnerable groups, such as the elderly and the disabled, and strengthen market rules for closing bank stores.
In order to reinforce social responsibility in finance, the burden of insurance premiums will be eased through rational improvement of auto insurance and real-life insurance, and the provision of useful information that consumers can experience, such as finding hidden financial assets, will be expanded.
The Financial Supervisory Service also revealed plans for financial innovation in preparation for the post-corona era. We will actively conduct licensing examinations for new financial services businesses, and strengthen supervision of new risks such as non-face-to-face transaction safety and cyber security.
Promote financial supervision by applying Subtech and Legtech. Reg Tech is a compound word of regulation and technology, and refers to technology that utilizes information and communication technology to streamline regulatory compliance tasks such as legal compliance, compliance monitoring, and internal control. Suptech is a compound word of financial supervision and technology. It refers to a technique for efficiently performing financial supervision work using the latest technology.
Lastly, the Financial Supervisory Service decided to promote management efficiency, such as strengthening organizational and budget management, and securing a youthful spirit that meets the standards of the public through internal renewal.