The Financial Supervisory Service is increasing the number of inspections for financial companies this year by 30% from last year. Incomplete sales of high-risk products such as private equity funds are inspected intensively, and the status of overseas real estate funds with high potential risk is inspected.
However, considering the spread of Corona 19, it is planning to flexibly test it. It focuses on urgent issues, such as issues that are concerned about immediate consumer damage or that their soundness can rapidly deteriorate. The non-face-to-face inspection method is also actively used.
On the 21st, the Financial Supervisory Service announced the ‘2021 Financial Supervisory Service Inspection Operation Plan’ containing these details. This year’s FSS inspection will focus largely on △protecting financial consumers and △stabilizing the financial system.
The Financial Supervisory Service explained, “There are more tests than last year when the number of tests decreased due to Corona 19, but except for last year, tests are conducted at the same level as in previous years.”
◇ Intensive inspection of private equity funds this year… Strengthening of non-face-to-face channels such as Internet banking
Following last year, this year, we will focus on incomplete sales of high-risk products such as private equity funds. The status of implementation of the comprehensive improvement plan for private equity funds announced in November 2019 will be checked, and the ongoing full-scale inspection of professional private equity managers will take precedence from managers with high probability of illegality.
For banks, it focuses on bancassurance and trust sales. This is because, as private equity sales contract, unhealthy business practices may occur in other product groups. For securities firms and managers, the status of alternative investment and real estate project financing (PF) is checked.
Non-face-to-face sales channels that have rapidly increased since Corona 19 are also subject to intensive inspection of unsound business practices. It was decided to examine whether there are any weaknesses by conducting an evaluation of the business condition of specialized internet banks. In order to proactively respond to the risks of the simple payment market, the company plans to strengthen the inspection of Big Tech companies.
◇ Prepare for Corona 19 insolvency… Reinforced monitoring of financial institutions’ loan structure and provisions
The loan structure and delinquency rate of individual financial companies are intensively monitored, and the adequacy of provisions for the second financial sector is intensively checked.
In particular, it was decided to preemptively request a self-reliance plan for financial companies that are judged to have weak financial soundness through the signing of a business agreement (MOU).
We also check the status of overseas real estate funds that have increased the risk of Corona 19. The plan is to monitor the trend of alternative investment concentration and to check the status of risk management by financial companies in preparation for possible losses.
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