SEOUL, Dec. 14 (Korea Bizwire) – A slew of changes are coming to the financial services sector, from internet banks and the postal service being given the green light to begin offering products – a means of beefing up competition and thereby creating a “catfish effect” – to shrinking the yearly sales volume of firms’ subsidiaries from 50 to 25 percent.
The Financial Services Commission (FSC) issued a document detailing the impending changes on December 13.
The two chief areas of focus were lowering the financial burden and upping earning rates for the average investor of publicly offered funds, and easing rules regulating the private equity market to create an investment arena for experts.
In addition to internet banks and the postal service, South Korea’s credit union, select Nonghyup locations, and analogous financial institutions will be granted approval from the financial authorities to sell publicly offered funds.
Certain entities such as Nonghyup and the postal service were permitted to sell since last year, but they have so far been the exception.
Currently, the top 10 financial services firms are responsible for over 50 percent of all financial products sales volume, a market reality that may change through the introduction of more affordable options that will be provided by the entities soon to join the mix.
In the interest of reducing fees incurred, products like online funds and exchange-traded funds are likely to become consistently improved.
Subsidiaries’ yearly sales volumes are to be halved by 2022 from 50 percent to 25 percent to stamp out practices in which firms funnel customers to their own sellers. Taking into account the impact such a change will have on the market, the government’s decision has been to trim 5 percent per year for the next five years.
Prospective private equity firms will see the required floor of 2 billion won in capital lowered to 1 billion won in a move designed to encourage market entry. Furthermore, establishing a private equity fund will no longer require registration as a general partner.
Registration for the thirteen private equity firms currently awaiting approval are forecast to be processed as soon as possible.
Lina Jang (email@example.com)