Korea has simplified its licencing regime for financial institutions as part of an overhaul of financial services regulation, with the aim of making it easier for sell-side and buy-side firms to expand the scope of their services.
Once a firm has secured a licence from the Financial Services Commission (FSC) to operate a particular business, it can open a new business within the same sector via “add-on registration”. Previously, firms had to go through a separate approval process to launch a new business line.
In addition, the FSC has reduced the number of different types of financial investment business it regulates from 42 to 13.
A number of existing licencing and registration regulations have also been loosened to improve commercial flexibility for providers of banking, securities and investment services.
For example, firms that have voluntarily repealed a business licence for restructuring purposes will be able to reapply within one year, rather than having to wait for five years to re-enter the business, as is currently the case.
A fast-track procedure will be introduced to expedite approval for “add-on” businesses, which is expected to reduce approval times by half to three to four months.
A draft bill to revise existing laws and regulations will be submitted to Korea’s National Assembly by the end of the year, but measures that do not require legal changes will be implemented by September.
The licence changes are part of a wholesale reform of financial sector regulation announced last week, designed to “create new opportunities and growth drivers for Korea’s financial industry and economy”.
The plan is the outcome of an extensive initiative by the FSC to identify and eliminate rules that constrain the growth and innovation of the financial sector. Following a consultation exercise launched in March, the regulator is reforming approximately a quarter of all existing regulations.
It is also shifting to “two-track approach” to regulation of the Korean finance sector; rules-based for matters of systemic stability, consumer protection and personal data security, but principles-based for conduct of business rules.
As well as the new licencing rules announced this week, the FSC also intends to provide more detail on reforms to the insurance sector, internal controls, holding companies and improvement of existing rules before the end of the month.