Recent Enactments of Five Financial Laws
Recent Enactments of Five Financial Laws
1. Setting and amending five financial acts: assisting e-commerce develop, further promoting the healthy development of the financial industry, strengthening financial consumer protection.
2. The course of promotion of the Five Financial Acts
(1) The Electronic Payment Processing Institutions Act was set; (2) Insurance Act was amended; (3) The Offshore Banking Act was amended; (4) The Bank Act was amended and (5) The Financial Consumer Protection Act was amended; the new act and the amendments were all passed by the Legislative Yuan in January this year and promulgated by the President in February.
II. The main points and benefits of the Five Financial Acts
1. The Act Governing Electronic Payment Institutions
(1)Objective of setting this act
a. Allow sound e-commerce payment services to be provided and assist with the development of electronic business.
b. Allow third party payment business operation, increasing public trust in online transactions, helping young people set up online businesses.
(2)Scope of operations opened up
a. Agency collection and payment for actual transactions
b. Receiving stored value money
c. Money transfer between e-payment accounts
d. Other businesses approved by the central competent authority (general clause)
Note: 15 authorizing branch laws will be completed in March
1. Increase the scale of the e-commerce market
a. Market scale was around NT$880 billion in 2014
b. It is estimated that transaction scale will increase by NT$120 billion to 200 billion in 2015 and e-commerce will go on to become a trillion NT$ industry
2. Help young people start business
a. At present Taiwan has around 100,000 individual online traders and online stores
b. It is estimated that this figure will increase by 10-20% in 2015, an increase of 10,000- 20000 traders/stores.
2. Bank Act
Ease restrictions on bank reinvestments: The limit on total bank reinvestment shall be based on “net value” not paid-in-capital.
Expand the business in the international market: According to the estimate, domestic bank merger and acquisition capability may increase overall by NT$500 billion.
Revised the caps for interest rate of cash card and credit card: From September 1, 2015 the interest rate of cash cards and revolving interest rate of credit cards shall not exceed 15% per annually.
Effectively reduce the interest burden of card holders: Benefiting more than 1 million people.
Ease restrictions on bank issue of bonds: The restrictions on bond provision of medium and long-term credit have been lifted and stipulation that the time limit for return of principle should not be less than two years has been deleted.
Develop the domestic bond market:
1. Increase bank bond issue flexibility, meeting institutional investor demand by the issuance of debentures of various terms.
2. The estimate of the issuance amount of debentures this year (2015) is NT$232.0 billion.
3. The Offshore Banking Act
Increase international insurance businesses: Including the scope of international insurance business in international financial business.
Increase insurance industry business opportunities, enhance the industry’s competitiveness.
Allowing OIU to be established in the ROC: OIU can be established by foreign insurance companies in the ROC and are allowed to conduct policy holder and insurer related insurance business outside ROC territory.
1. Increase market scale, increase premium income: it is estimated that, in the first year, premium income will increase by around NT$5 billion and continue to increase year after year.
2. Nurture international talent, increase employment opportunities.
4. The Insurance Act
Promotion of an immediate correction mechanism: Introduces supervisory measures for RBC ratio grade of insurance companies. An insurance company with seriously inadequate RBC shall face supervision, takeover, closedown and liquidation or dissolution ordered by government.
In future, public money will no longer be used to deal with problem insurance companies”. When an insurance company’s RBC is seriously deficient (net value is still positive) it will be forcibly taken over in accordance with regulations.
Allowing banks to engage in concurrent insurance agent business and insurance broker business: In the past, when banks established insurance agent or broker companies customers often were confused about the relationship between the parent and subsidiary and were unclear as to who to complain to.
Expected benefits of liberalization: Banks can establish insurance departments, protecting the rights of consumers.
5. The Financial Consumer Protection Act
Improper sale of financial products: In serious cases the person in charge can be relieved of their position or business license revoked.
Encourage operators to be careful with regards the sale of financial products, protecting the rights of investors.
Increase of operator fine liability and adding of punitive damages claim right:
1. Fine of NTG$300,000-1,000,000 can now be imposed. In serious case the maximum fine limit will not apply.
2. Courts can impose punitive damages up to three times the damage caused.
Increasing the fines that can be imposed on operators and adding the punitive damages claim right, strengthening protection of financial consumers.
Strengthened management of the remuneration system and high risk products:
1. Financial services enterprises should set a sales personnel remuneration system and have it approved by the Board of Directors or the Executive Board of Directors.
2. The initial sale of complex, high risk products by financial services enterprises should be reported to and approved by the Board of Directors or the Executive Board of Directors.
Encourage management to attach importance to remuneration system and complex high risk products, avoiding a culture of inappropriate sales to protect the consumer.
A group ombudsman case mechanism has also been added: In cases of financial consumer disputes caused by single objective fact, a group ombudsman case can be initiated (more than 20 consumers authorize a designated juristic person to initiate an ombudsman case.)
Resolve financial consumer disputes with single objective fact in a unified way, helping disadvantaged financial consumers apply for an ombudsman case and saving ombudsman case resources.
III. Conclusion: Implementation of the Five Financial Acts mark a new milestone for the development of the financial industry
1. Parallel setting down of deep roots in Taiwan and establishing a presence in Asia.
2. Attaching equal importance to financial industry development and consumer protection.
3. Cooperation between the financial industry and general industry to promote development.
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- Update： 2015-03-09