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| Financial Services Commission (FSC) Chairman Kim Joo-hyun speaks during a regulatory reform meeting held in central Seoul, Monday. Courtesy of FSC |
FSC to revise decades-long rule separating financial and industrial capital
By Anna J. Park
Seeking to stimulate innovative growth in the banking industry, the top financial regulator vowed to take concrete steps as early as the first half of next year to change the country's decades-old law that strictly separates financial and industrial capital.
Since 1961, the Banking Act has restricted financial companies from owning non-financial firms and vice versa. The separation is aimed at protecting the financial sector's capital soundness from possible misuse by big businesses.
"In order for local financial companies to be able to provide new and innovative services, it is necessary to make changes to the current legal framework that stipulates the separation of financial and industrial capital," Financial Services Commission (FSC) Chairman Kim Joo-hyun said during a regulatory reform meeting held in central Seoul on Monday.
Since taking office in July, the FSC chief has been stressing his determination to reform the long-held restriction in order to create momentum for the local financial industry.
But Kim added a caveat by calling for thorough research on how to bring about the desirable landscape of the future financial industry before making changes to the long-held separation. The FSC plans to examine both the economic and legal sides of related issues that would be affected by the change.
"Although the current financial market is facing various challenges, financial innovation is another main pillar of the financial industry, along with the stability of the financial market," the FSC chief said during the meeting, vowing to simultaneously push ahead with both financial stability and innovation.
"At the juncture of digital transformation, it is expected that the easing of the financial-industrial capital separation would generate new business models and investment opportunities, with an increased facilitation of blending both the financial and non-financial sectors," Kim said.
The FSC also plans to change the domestic rule that stipulates that an insurance company is entitled to only one insurer's license. By changing that rule, local insurers will be able to set up insurance affiliates. For instance, a traditional insurance company will be able to launch another insurance company specialized in pet insurance plans.
Monday's meeting is the fourth of its kind, aimed at easing unnecessary financial regulations. The FSC chairman and Financial Supervisory Service (FSS) Governor Lee Bok-hyun, along with several key financial association leaders, also attended the meeting.
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