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Introduction

Innovative Financial Services are services provided in the financial industry or related businesses that are recognized for their differentiated content, method, form, etc. and designated as regulatory exceptions.

Eligibility Criteria

A company* or financial company, etc.,** as defined by the Commercial Act, with a place of business located in Korea

* This does not apply to a “foreign company,” which does not have a place of business in Korea, or a “self-employed individual,” whose business is not in the form of a company
** financial company, etc.: Financial companies such as banks, insurance companies and financial investment companies + Electronic financial business operators, etc.+ Public corporations and funds in the financial business + Associations established in accordance with finance-related laws + Non-profit corporate bodies whose establishment was approved by the FSC

Procedure

1
Application
Submission of the official application form
The applicant fills out and sends the application form for the designation as an Innovative Financial Services
2
Review
Review by the working-level group of the Financial Services Commission (FSC) and Financial Supervisory Service (FSS) and convening of the Innovative Financial Service Review Committee
* Article 11 of the Regulations, Article 13 of the Act
Innovative Financial Service Review Subcommittee → Innovative Financial Service Review Committee
3
Designation
FSC
* Article 4 of the Act
Decision on designation following a review by the Innovative Financial Service Review Committee and consent from the related administrative agencies
4
Supervision &
Monitoring
Designation as a regulatory exception and service operation
Instruction, change or suspension in case of concerns regarding consumer harm or market confusion based on monitoring of compliance with risk management measures (Up to 2 years extension is possible)
5
Support for
Establishment
in the Market
Efforts to promptly improve the related regulations
Promptly improve the regulations related to the Innovative Financial Services that does not raise any problems in consumer safety or financial instability

Review Criteria

  • 1) Serviced region : Whether the service will be primarily carried out in the domestic financial market
  • 2) Innovativeness of the service : Whether the service is sufficiently innovative compared to the existing services
  • 3) Benefits for consumers : Whether it will additionally benefit financial consumers
  • 4) Inevitability of regulatory exception : Whether it is possible to provide the financial service in question without any regulatory exception or whether the application of a regulatory exception will lead to evasion or circumvention of the regulations
  • 5) Qualification and competency to operate the service : Whether the applicant is qualified and competent to operate the service appropriately
  • 6) Scope of the service and business method and plan : Whether the scope of the service and business method are specific, and the business plan is reasonable and sound
  • 7) Consumer protection and risk management measures : Whether the consumer protection and risk management measures are sufficient
  • 8) Stability of the financial market and order : Whether there are any concerns of substantially undermining the stability of the financial market and order
  • 9) Attainment of the objectives of finance-related statutes : Whether there are any concerns of substantially undermining the attainment of the objectives of finance-related statutes

Effect of
Designation

Regulatory exception, exemption, etc. to provide the Innovative Financial Services
Pilot Operation & Regulatory Exception (articles 16 and 17 of the Act)
  • Can provide the Innovative Financial Services within the designated scope without receiving authorization or permission for the financial business
  • Regulatory exception in relation to finance-related statutes or regulationsconcerning authorization, permission, registration, reporting, governance, scope of business affairs, soundness, and business activities of service provider
    • - Designation of regulatory exceptions in relation to other statutes under the jurisdiction of other ministries (Digital Signature Act, Foreign Exchange Transactions Act, etc.) require consent from the ministry with jurisdiction over the statute concerned
    • - Regulatory exception will be denied in case there are concerns of causing irreparable harm to consumers or undermining financial order
    • ※ [Note] Non-finance-related statutes that are not subject to regulatory exceptions: Act on the Regulation of Conducting Fund-Raising Business without Permission, Act on Reporting and Using Specified Financial Transaction Information, etc.

Matters Requiring Attention

Compliance with the Duty to Protect Consumers
Articles 18 through 21 and 27 of the SPECIAL ACT ON SUPPORT FOR FINANCIAL INNOVATION (Supervision and Consumer Protection
  • Monitoring of the provision of the Innovative Financial Services
  • Mandatory for the service provider to prepare consumer protection and risk management measures
  • Mandatory for the service provider to prepare devices to guarantee the fulfillment of liability for damages such as subscribing to a liability insurance
Compliance with Relevant Statutes

Statutes
Subject to
Regulatory
Exception

The term "finance-related statutes or regulations" means finance-related statutes specified in the attached Table and statutes or regulations prescribed by Presidential Decree
Finance-Related Statutes
  • 1. 「PERSONAL INFORMATION PROTECTION ACT」
  • 2. 「REGISTRATION OF BONDS AND DEBENTURES ACT」
  • 3. 「ACT ON THE GUARANTEE OF EMPLOYEES' RETIREMENT BENEFITS」
  • 4. 「ACT ON THE STRUCTURAL IMPROVEMENT OF THE FINANCIAL INDUSTRY」
  • 5. 「ACT ON REAL NAME FINANCIAL TRANSACTIONS AND CONFIDENTIALITY」
  • 6. 「ACT ON THE ESTABLISHMENT, ETC. OF FINANCIAL SERVICES COMMISSION」
  • 7. 「FINANCIAL HOLDING COMPANIES ACT」
  • 8. 「ACT ON CORPORATE GOVERNANCE OF FINANCIAL COMPANIES」
  • 9. 「농업협동조합법AGRICULTURAL COOPERATIVES ACT」 *
  • 10.「SECURED BOND TRUST ACT」
  • 11. 「ACT ON REGISTRATION OF CREDIT BUSINESS, ETC. AND PROTECTION OF FINANCE USERS」
  • 12. 「INSURANCE BUSINESS ACT」
  • 13. 「REAL ESTATE INVESTMENT COMPANY ACT」
  • 14. 「 FORESTRY COOPERATIVES ACT」 *
  • 15. 「MUTUAL SAVINGS BANKS ACT」
  • 16. 「COMMUNITY CREDIT COOPERATIVES ACT」
  • 17. 「SHIP INVESTMENT COMPANY ACT」
  • 18. 「FISHERIES COOPERATIVES ACT」 *
  • 19. 「CREDIT INFORMATION USE AND PROTECTION ACT」
  • 20. 「CREDIT UNIONS ACT」
  • 21. 「SPECIALIZED CREDIT FINANCE BUSINESS ACT」
  • 22. 「FOREIGN EXCHANGE TRANSACTIONS ACT」
  • 23. 「BANKING ACT」
  • 24. 「FINANCIAL INVESTMENT SERVICES AND CAPITAL MARKETS ACT」
  • 25. 「INSURANCE BUSINESS ACT」
  • 26. 「ELECTRONIC FINANCIAL TRANSACTIONS ACT」
  • 27. 「ACT ON ISSUANCE AND DISTRIBUTION OF SHORT-TERM ELECTRONIC BONDS, ETC.」
  • 28. 「FRAMEWORK ACT ON ELECTRONIC DOCUMENTS AND TRANSACTIONS」
  • 29. 「DIGITAL SIGNATURE ACT」
  • 30. 「ACT ON PROMOTION OF INFORMATION AND COMMUNICATIONS NETWORK UTILIZATION AND INFORMATION PROTECTION, ETC.」
  • 31. 「ACT ON ELECTRONIC REGISTRATION OF STOCKS, BONDS, ETC.」
  • 32. 「INDUSTRIAL BANK OF KOREA ACT」
  • 33. 「KOREA DEVELOPMENT BANK ACT」
  • 34.「EXPORT-IMPORT BANK OF KOREA ACT」
* These statutes are being translated by the Korea Legislation Research Institute
Statutes Prescribed by Presidential Decree
  • A. 「ACT ON THE EFFICIENT DISPOSAL OF NON-PERFORMING ASSETS, ETC. OF FINANCIAL COMPANIES AND THE ESTABLISHMENT OF KOREA ASSET MANAGEMENT CORPORATION」
  • B. 「KOREA TECHNOLOGY FINANCE CORPORATION ACT」
  • C. 「ACT ON THE CREDIT GUARANTEE FOR FARMERS AND FISHERS」
  • D. 「TRADE INSURANCE ACT」
  • E. 「ACT ON SPECIAL MEASURES FOR THE PROMOTION OF VENTURE BUSINESSES」
  • F. 「CREDIT GUARANTEE FUND ACT」
  • G. 「DEPOSITOR PROTECTION ACT」
  • H. 「SUPPORT FOR SMALL AND MEDIUM ENTERPRISE ESTABLISHMENT ACT」
  • I. 「KOREA HOUSING FINANCE CORPORATION ACT」