Operation of a Comprehensive Support Team for Vulnerable Groups Covering Finance, Employment, and Welfare
Strengthening Comprehensive Support for Vulnerable Groups and Restoring Trust in Mutual Financial Institutions
The Financial Services Commission announced on the 28th that starting from the 29th, it will establish and operate a Complex Support Team for comprehensive and multifaceted support for low-income and vulnerable groups through inter-ministerial collaboration linking finance, employment, and welfare, as well as a Mutual Finance Team to systematically manage mutual financial institutions such as credit unions, NongHyup, and Saemaeul Geumgo.
On March 20, the Ministry of the Interior and Safety selected 11 collaborative tasks that require urgent resolution from the public’s perspective and inter-ministerial cooperation as follow-up measures to the public livelihood forum presided over by the President, and announced plans to reinforce collaborative personnel. The Financial Services Commission was selected as the lead ministry for two of these tasks (complex support linking finance, employment, and welfare, and establishment of a collaborative supervisory system for mutual finance), and established the collaborative organization to smoothly carry out these tasks.
The Complex Support Team plans to enhance the role of the Integrated Support Center for Low-Income Finance as a comprehensive platform that supports not only finance but also employment and welfare. It will actively discover new collaborative tasks for financial-welfare complex support with related agencies (Ministry of the Interior and Safety, Ministry of Health and Welfare, Financial Supervisory Service) to expand the scope of complex support, and strengthen the linkage between the Integrated Support Center for Low-Income Finance, Employment Welfare Plus Center, and Mental Health Welfare Center to provide more systematic complex support.
Additionally, the team will work to raise public awareness of complex support, strengthen promotion of the system to ensure successful establishment of complex support-related policies in the field, and develop and compile statistical indicators for systematic performance management.
The Mutual Finance Team will perform the following tasks to promote the sound development and systematic management and supervision of the mutual finance sector. To enhance public trust in the mutual finance sector, it will strengthen soundness management. It will closely monitor loans with concerns about insolvency, such as real estate and construction loans, and continue risk management efforts such as disposal of non-performing loans and debt adjustment. It will also conduct regular checks on liquidity and other emergency response capabilities to ensure that the mutual finance system operates more stably.
In particular, regarding Saemaeul Geumgo, which is currently managed and supervised by the Ministry of the Interior and Safety, a supervisory collaboration system will be established between the Financial Services Commission (Financial Supervisory Service, Korea Deposit Insurance Corporation) and the Ministry of the Interior and Safety (Saemaeul Geumgo Central Association) based on the memorandum of understanding (MoU) signed in February this year. The Financial Services Commission will closely consult with the Ministry of the Interior and Safety throughout the supervision process of Saemaeul Geumgo, cooperating with related agencies on non-performing loan cleanup and information sharing to enhance the soundness of Saemaeul Geumgo.
Efforts will also be made to improve the mutual finance system to resolve regulatory differences within the mutual finance sector. Due to its characteristics, mutual finance has traditionally been subject to somewhat looser soundness regulations and governance systems compared to commercial financial institutions. However, considering the continuous expansion of asset size and increase in high-risk loans, it is now time to refine the system to fit both scale and substance. Especially since regulatory differences within the same mutual finance sector have raised issues of fairness and unfair competition between sectors, related agencies will cooperate to seek systematic system improvement measures.
Furthermore, the Mutual Finance Team plans to carry out policy formulation related to mutual finance, improvement of related laws and regulations including enactment and revision, licensing and approval, supervision, support for restructuring, supervision of related agencies, and research and investigation on the mutual finance sector. The Financial Services Commission plans to closely collaborate with related agencies centered on the Mutual Finance Policy Council to fundamentally support the economic independence of vulnerable groups, establish a sustainable welfare foundation, and ensure thorough management and supervision of the mutual finance sector through the newly launched collaborative organizations.
Kim Ju-hyun, Chairman of the Financial Services Commission, said, “As the collaborative organization is launched jointly by related ministries, we expect that more effective support will be provided to vulnerable groups and a foundation will be laid for restoring public trust in mutual financial institutions.” He added, “We will continue to work closely with related agencies to bring about changes that the public can feel on the ground.”
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