(1) Reasons for Proposal

This Act aims to ensure the sound management of financial groups and the stability of financial markets by establishing basic matters such as the management of risks that may lead a financial group to poor financial status due to the internal control system, risk management system, capital adequacy, management of internal transaction and risk concentration, financial and management risks of affiliates, etc., at the financial group level and aims to provide an institutional foundation for the oversight of financial groups to protect financial consumers.

(2) Major Provisions

A. Designation of financial groups subject to supervision (Article 5) 

Allow the Financial Services Commission to designate financial groups that meet the requirements of a financial conglomerate with financial assets of 5 trillion won or more as the subjects of the oversight to supervise financial groups.

B. Preliminary review of financial group soundness requirements (Article 6) 

Where any person, etc., who intends to run a new financial business, who intends to merge, etc., a financial business, or who intends to be a major shareholder of a financial company is subject to the requirements of the financial group supervision by obtaining a license, permit, or approval from the Financial Services Commission, require the Financial Services Commission to review in advance whether he/she meets the requirements for soundness as a financial group.

C. Prohibit the use of similar names such as financial group (Article 7) 

By prohibiting any person who is not a financial group that is designated as the subject of the supervision from using financial group or similar words in his/her trade name or company name, prevent financial consumers in the market from transacting with those who do not have soundness as a financial group, mistaking them as healthy financial groups.

D. Select a representative company (Articles 8 and 9) 

Require the Financial Services Commission to select a representative company in a financial group to carry out various affairs such as internal control and risk management in the financial group.

E. Financial group internal control system (Articles 10 and 11) 

Require any financial group to establish internal control policies for compliance with statutes, sound management, etc., at the financial group level, and to install and operate an internal control organization of the financial group to assist the board of directors of the representative company that deliberates and decides on the main matters of internal control of the financial group.

F. Financial group risk management system (Articles 12 and 13) 

Require any financial group to establish risk management policies to manage risks, etc., in the business process, various transactions, etc., at the financial group level, and to install and operate a risk management organization of the financial group to assist the board of directors of the representative company that deliberates and decides on the main matters of risk management of the financial group.

G. Manage the soundness of financial groups (Articles 14 through 17) 

Allow the Financial Services Commission to require financial groups to manage capital adequacy at their financial group level considering the potential overlapping use of their capital between financial companies, the possibility of risk transfer in a financial group, etc., and require financial groups to raise the loss-absorption capacity, etc., to be improved by requiring additional capital to be reserved, considering the effects of internal transactions, risk concentration on financial groups' soundness and the transfer of risks that financial and management risks of a non-financial affiliate may lead a financial group to poor financial status, etc.

H. Provision and management of customer information and joint advertising, etc. (Article 18) 

Allow a financial company belonging to a financial group to provide financial transaction information, personal credit information, and information on total securities to other financial companies belonging to the financial group for internal management purposes, such as the risk management of the financial group, and allow a financial company belonging to a financial group to jointly advertise or use computer systems, office space, and branches.

I. Supervision and inspection (Articles 19 and 20) 

Allow the Financial Services Commission to supervise whether financial groups comply with this Act, and require representative companies to be inspected by the Governor of the Financial Supervisory Service for financial group risk management, etc.

J. Supervisory council and reporting and disclosure (Articles 21 and 22) 

Require that the Financial Services Commission improve the supervisory system, including establishing a collaboration system between the general supervisory department for financial groups and supervisory department for each financial industry to efficiently and organically supervise financial groups, and require any representative company of financial companies to report and disclose integrated capital adequacy and major risk factors of the financial group.

K. Evaluate the risk management status of financial groups (Article 23) 

Allow the Financial Services Commission to regularly evaluate financial groups’ risk status and management status, and to supervise financial group-level management soundness.

L. Measures to improve the soundness of financial groups (Article 24) 

Allow the Financial Services Commission to require a financial group to take measures to improve its risk management, such as submitting a business improvement plan and prohibiting the use of the name, financial group, depending on the evaluation results of the capital adequacy or risk management of the financial group.