Financial Services Commission: "Financial Group Supervision Act Is Not Redundant Regulation"

[Asia Economy Reporter Kangwook Cho] The Financial Services Commission (FSC) has officially stated that the Act on the Supervision of Financial Conglomerates, one of the three Fair Economy Acts recently passed by the National Assembly plenary session, is "not a duplicate regulation."

On the 16th, at a joint briefing held at the Government Seoul Office, the FSC explained the main contents and expected effects of the three Fair Economy Acts (Commercial Act, Fair Trade Act, and Act on the Supervision of Financial Conglomerates) and made this announcement.

According to the Act on the Supervision of Financial Conglomerates, groups whose affiliated financial companies operate two or more financial businesses and whose total assets of affiliated financial companies exceed 5 trillion won, meeting the requirements prescribed by Presidential Decree, are designated as financial conglomerates. Currently, six groups meet these criteria: Samsung, Hanwha, Mirae Asset, Kyobo, Hyundai Motor, and DB.

Regarding concerns that the Act on the Supervision of Financial Conglomerates might constitute overlapping regulation in addition to sector-specific regulations, the FSC stated, "Since the risks regulated and supervised by the existing individual sector laws and the Act on the Supervision of Financial Conglomerates differ, it is difficult to consider this as double regulation."

Sector-specific financial supervision manages the soundness and capital adequacy of individual financial companies. However, this law is intended to evaluate and supervise group-wide risks such as appropriate capital adequacy for the entire group due to overlapping capital caused by mutual or circular investments among affiliated financial companies, which are difficult to regulate under individual financial sector laws, as well as risk transmission from specific affiliates and risk concentration across the entire financial conglomerate.

In response to concerns that non-financial companies outside the financial sector might also be subject to regulation, the FSC firmly denied this, stating, "That is absolutely not the case."

The FSC explained, "This law does not impose any obligations on non-financial affiliates nor does it include provisions for financial authorities to supervise non-financial affiliates."

Regarding the expected effects of this law, the FSC stated, "Not only will the autonomous risk management system of financial conglomerates be established, but through proactive management of financial market system risks by financial authorities, market stability can be secured," adding, "The financial soundness of financial conglomerates will be ensured, minimizing risks such as risk transmission and simultaneous insolvency, thereby preventing damage to financial consumers and investors in advance."

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