"Innovative Financial Companies Can Also Request Regulatory Improvements"…Financial Innovation Act Amendment Passed in Plenary Session

Scheduled to take effect from the day three months after the public announcement

[Asia Economy Reporter Park Sun-mi] The "Special Act on Financial Innovation Support," which was primarily proposed by Kim Byung-wook, a member of the Democratic Party of Korea, to alleviate concerns about the suspension of innovative financial service projects, has passed the plenary session.

On the 24th, the Financial Services Commission (FSC) announced that the amendment allows innovative financial service providers to request regulatory improvements, and stipulates that when the relevant regulatory authorities decide to revise financial-related laws accordingly, the special period can be extended (up to 1 year and 6 months). The revised Financial Innovation Act is scheduled to take effect three months after its promulgation, and the FSC plans to promptly proceed with preparatory work, including the establishment of subordinate regulations, to ensure smooth implementation of the amendment.

According to the amendment, a procedure is introduced allowing innovative financial service providers to request the FSC and heads of related administrative agencies to improve relevant regulations at least three months before the expiration of the special period. The decision-making process for revising financial-related laws by the FSC and other regulatory authorities in response to the service providers' requests has also been specified. When a decision to revise financial-related laws is made, the special period for innovative financial services is considered not expired until the revision is completed and enforced, allowing innovative financial service providers to continue their services. In this case, the special period can be extended up to a maximum of 1 year and 6 months (6 months plus two extensions of 6 months each) from the expiration date of the innovative financial service designation period.

The government introduced the regulatory sandbox system last year to resolve issues where new technologies and industries could not grow due to existing regulations. Since the enactment of the Special Act on Financial Innovation Support, 115 innovative financial services have been designated to date. Through various new industries that could not proceed due to regulations, fintech has been revitalized, creating diverse jobs and generating positive impacts.

However, since the special period for innovative financial services is limited to a maximum of '2+2 years,' concerns have been raised that projects may be suspended if related laws are not revised within the special period. To continue providing services after the special period ends, the enactment or revision of related laws is necessary. However, the current Special Act on Financial Innovation Support only stipulates the 'recommendation for enactment or revision of laws' procedure by the Financial Innovation Review Committee, limiting innovative financial service providers from requesting system improvements.

An FSC official stated, "With this legal amendment, innovative financial service providers can offer services more stably without anxiety about the expiration of the period, and consumers can also receive services more reliably." He added, "Furthermore, by institutionalizing the regulatory improvement request system, the rights of innovative financial service providers are explicitly guaranteed, and it is expected that regulatory improvements, the ultimate goal of the sandbox system, will be further activated."

Representative Kim Byung-wook also said, "The Special Act on Financial Innovation Support was primarily proposed to prevent innovative financial services based on new technologies from being suspended due to legal deficiencies." He added, "I hope this will serve as a foundation to create an environment where innovative financial service providers can operate innovative financial services with peace of mind without having to close their businesses due to institutional shortcomings."

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