[Asia Economy Reporter Bu Aeri] The Financial Supervisory Service (FSS) announced on the 6th that it will "proactively respond to crisis situations and changes in the financial environment this year, and create a warm and fair financial environment."
On the same day, the FSS announced its 2023 business plan and revealed four major strategies and 12 core tasks.
The four major strategies are strengthening comprehensive responses for financial system stability, enhancing supervision of livelihood finance and improving the social safety net function of finance, supporting sustainable innovation and future growth of the financial industry, and fostering a culture of responsible management in financial companies and establishing sound financial order.
First, the FSS plans to diagnose potential risk factors such as real estate project financing (PF) early and respond proactively, while expanding the loss absorption capacity of financial companies to enhance crisis response capabilities.
To prepare for the spread of market risks originating from real estate, the FSS plans to integrate and manage the real estate PF management systems, which are currently managed by financial sectors, at the project site level and respond proactively.
It will reorganize the liquidity risk management system of securities companies and closely monitor the funding status of credit finance companies and others. For companies at risk of insolvency, customized support will be promoted according to risk levels through credit risk assessments.
The FSS will also work to expand financial companies’ loss absorption capacity and strengthen risk management. It plans to check the level of loan loss provisions in the banking sector and expand theme-based stress tests to enhance banks’ loss absorption capacity.
Additionally, to improve the financial soundness supervision system, the FSS will increase the evaluation weight of internal control in banks.
Regarding strengthening supervision of livelihood finance, the FSS will enhance financial and non-financial support to help vulnerable groups overcome crises and crack down on financial crimes.
It will strengthen the stable supply of microfinance such as Saehope Hope Loan and build a comprehensive information center to support small and medium enterprises and self-employed individuals, while expanding non-financial support such as management consulting in the banking sector.
Regarding future growth support, the FSS stated it will support innovation in the financial sector and proactively respond to consumer protection risk factors such as IT risks.
The FSS plans to consider designating additional specialized data institutions and expanding the scope of work for MyData operators to promote data combination and utilization between financial and non-financial sectors.
To prevent conflicts of interest in loan comparison platforms, the FSS plans to strengthen supervision of product recommendation algorithms and revise the regulatory system for new types of digital advertising.
The FSS will also establish an innovation promotion organization for financial supervision. It will continuously identify and improve unreasonable regulations and supervisory practices, and support financial companies’ new business initiatives through improvements in licensing, contract review systems, and processes.
Regarding fostering a culture of responsible management in financial companies, the FSS plans to induce enhancement of internal control capabilities and strictly respond to unsound and unfair business practices by financial companies.
The FSS stated, "We will check the status of governance establishment of bank holding companies and banks, the appropriateness of board operations, and the adequacy of executive performance compensation systems."
It plans to review improvement measures for the operation of business divisions, including the scope of authority and responsibility of financial group business division heads and decision-making procedures, and check the status of risk management for joint investments among affiliates.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
