[1mm Financial Talk] Deadlock in the National Assembly... Financial Bills Stalled in Idle Rotation

Urgent financial sector livelihood bills are being delayed one after another due to external political pressures. The amendment to the Insurance Business Act, which includes the simplification of claims for indemnity insurance that has been dragged on for 14 years, and the Act on the Promotion of Corporate Restructuring, whose sunset period is approaching next month, are all stalled at various standing committee stages.

According to the financial sector on the 19th, the National Assembly's Legislation and Judiciary Committee convened a plenary meeting the day before with only the ruling party present but adjourned without handling any agenda. This was because the opposition party, the Democratic Party of Korea, declared a boycott of the National Assembly schedule and did not attend the meeting. The only committee that held a scheduled meeting was the Health and Welfare Committee, which discussed the recently controversial issue of protecting teachers' authority.

The ruling and opposition parties are sharply divided over the dismissal proposal of Minister Lee Sang-min, casting a red light on the passage of next year's budget. On the 12th, the National Assembly building was shrouded in silence. Photo by Yoon Dong-joo doso7@

As the Legislation and Judiciary Committee is at a standstill, the discussion and passage of the Insurance Business Act amendment, a long-awaited bill for financial consumers, have also been postponed. The amendment scheduled for discussion in the committee includes provisions to computerize and simplify indemnity insurance claims. The industry believed that since active explanations were made regarding the disagreements raised at the meeting held on the 13th, the bill had a high chance of passing at this meeting.

The simplification of indemnity insurance claims has been discussed since 2009 but has repeatedly stalled for 14 years due to opposition from the medical community concerned about personal information leaks. However, under the current government, discussions began to accelerate after the Digital Platform Government Committee selected the simplification of indemnity insurance claims as its first priority in April.

Jung Jeom-sik, the ruling party secretary of the National Assembly's Legislation and Judiciary Committee and a member of the People Power Party, emphasized at the meeting, "We need to pass a bill that resolves the inconvenience of claiming small insurance payments and benefits a significant portion of the public, but it is at risk of being blocked due to the opposition party's absence. Since the Supreme Court Chief Justice confirmation hearing is scheduled for the 19th and 20th, it will be difficult to pass the bill in a plenary session if not this time."

The standstill in the Legislation and Judiciary Committee and other key standing committees is due to the external political turbulence that blew through the political sphere the day before. The prosecution requested an arrest warrant for Lee Jae-myung, the Democratic Party leader, regarding allegations of preferential treatment in the Baekhyeon-dong project and illegal remittances to North Korea by the Ssangbangwool Group. On the same day, Lee was transferred to a hospital due to health deterioration after a 19-day hunger strike. In response, the Democratic Party boycotted the schedules of all standing committees except the Welfare Committee.

Discussions on extending the Act on the Promotion of Corporate Restructuring (Gichokbeop), which is set to expire on the 15th of next month, have also failed to make progress. In the National Assembly's Political Affairs Committee, the situation has deteriorated as the Democratic Party unilaterally passed the Act on the Honor of Democratic Movement Veterans.

The Act on the Promotion of Corporate Restructuring is the legal basis for the 'workout' system. The workout system allows companies showing signs of insolvency to receive maturity extensions and financial support based on self-help efforts if 75% of creditors agree, enabling prompt corporate restructuring. If this law is not passed in time and becomes ineffective as in the past, restructuring through voluntary agreements or court receivership will be inevitable, which requires 100% creditor consent or court approval, inevitably causing delays.

The Act was introduced as a temporary law in 2001 after the foreign exchange crisis to support corporate restructuring by the market in addition to court-led rehabilitation and bankruptcy and has been extended six times since then. The industry agrees that with the ongoing COVID-19 pandemic and global tightening trends, the number of companies showing signs of insolvency is increasing, making swift extension discussions necessary.

Additionally, in the Political Affairs Committee, the bill on the Management of Personal Financial Claims and Protection of Personal Financial Debtors (Personal Debtor Protection Act), which reduces overdue interest and collection burdens on individual debtors, and the amendment to the Depositor Protection Act, which includes the establishment of a Financial Stability Account, have also failed to progress at the subcommittee stage.

The industry is concerned that the political deadlock is likely to continue for some time, potentially prolonging the drifting of financial bills. The opposition party is currently pushing a hardline drive, including considering a motion to dismiss Prime Minister Han Duck-soo. A financial sector official said, "With the general election scheduled for April next year, conflicts between the ruling and opposition parties are intensifying, and if key bills are not processed in a timely manner, they will inevitably be postponed one after another."