Financial Services Commission Delays Introduction of Integrated Financial Group Supervision Disclosure... Eases Corporate Burden

[Asia Economy Reporter Haeyoung Kwon] The financial authorities have decided to simplify the disclosure items related to the 'Financial Group Integrated Supervision Disclosure System,' which is implemented for comprehensive risk management of financial groups such as Samsung, Hyundai Motor, and Hanwha, and to postpone the introduction timing. This is to alleviate the burden on companies as the disclosure items are excessively detailed and numerous, the preparation period is short, and financial companies' capacity is reduced due to deteriorating market conditions caused by the impact of the novel coronavirus disease (COVID-19).

According to the financial authorities and the financial sector on the 24th, the Financial Services Commission plans to approve a revision of the Financial Group Integrated Supervision Model Code, including postponing the implementation of the financial group disclosure system from June to September, on the 27th. Earlier, the FSC announced a revision of the Financial Group Integrated Supervision Model Code, focusing on ▲disclosure of financial risks at the financial group level ▲restructuring of the financial group capital adequacy evaluation system ▲establishment of an internal control council. Among these, the disclosure system was scheduled to be introduced in June.

An FSC official stated, "We have been closely consulting with companies to minimize the burden on disclosing companies and plan to adjust the disclosure items and timing." He added, "Since disclosure at the financial group level is a blind spot in information, we will design it in a way that aligns with overseas and international standards to provide necessary disclosures to the market while alleviating the burden on companies, from the perspective of corporate soundness and market information provision."

The financial group disclosure system to be introduced this time is a system that collects disclosure details scattered across each affiliate to clearly show risks at the financial group level and activate market evaluation and monitoring functions. Disclosure items cover both financial and non-financial aspects, including shareholding structures, affiliate investment and credit provision status, internal control systems, internal transactions, and details of financial company executives' job changes and concurrent positions. The disclosure forms required by the financial authorities amount to dozens of pages. The financial authorities have accepted the financial groups' request to postpone the system introduction, simplify disclosure items, and extend the disclosure frequency for some items to reduce the burden.

Separately from the introduction of this financial group disclosure, the financial sector is closely watching the possibility of legislation. This is because the ruling party, which won a landslide victory in the 21st general election, pledged to enact the Financial Group Integrated Supervision Act. According to the model code revision announced by the FSC earlier this year, the capital adequacy evaluation, previously divided into 'transmission risk' and 'concentration risk' assessments, will be reorganized into a single evaluation system. The key point is that the concentration risk method, which was the most controversial as it could force Samsung Life Insurance to sell Samsung Electronics shares, has been effectively excluded. However, there is a possibility that controversy may spread again if the National Assembly pushes for legislation on integrated supervision of financial groups in the future and judges a significant portion of Samsung Electronics shares held by Samsung Life Insurance as risky.

This content was produced with the assistance of AI translation services.