Press Release
FSC Announced New Wealth Management Regulations to Enhance the Competitiveness of Wealth Management Industry
2020-08-14
The FSC announced that the "Regulations Governing Banks Conducting Financial Products and Services for High-asset Customers" which was promulgated and implemented on August 7, 2020.
The FSC stated that the relaxation of the regulations and the introduction of related supervisory measures are expected to enhance the competitiveness of domestic wealth management business in the international financial market.
The Regulations relaxed regulations for a total of 8 financial products and services provided for high-asset customers including: foreign-currency bank debentures issued by banks may be connected to derivatives or structural bonds; banks may provide the aforementioned products through trusts or concurrent proprietary securities trading; DBUs may trade offshore structured bonds with high-asset customers through concurrent proprietary securities trading; offshore branch institutions or investees of domestic banks or securities firms may issue offshore structured products; OBUs may provide TWSE derivatives to high-asset customers; high-asset customers may be exempted from credit rating restrictions for investment in foreign bonds; banks may establish their own review procedures for offshore structured products; banks may provide financial products or consulting services based on the needs of high-asset customers. These relaxation measures allow banks to independently develop diversified financial products based on customer demands and increased their capability of developing financial products.
As the FSC relaxes regulations on business items, it will also adopt related supervisory measures to ensure the sound development of the business.
The first step is to establish standards for the banks'' application of business operations in accordance with the principle of differentiated supervision. The standards include compliance with "financial and business soundness" and "maintenance of a certain scale of wealth management business foundation". In terms of the scale of wealth management businesses, the FSC added provisions in Article 7, Subparagraph 2, Item 4 in the Regulations to encourage businesses to actively "attract investment and recruit talents". The criteria for the scale of assets under management may be adjusted to 70% of the requirement if the bank promises to increase substantive investments, scale of assets under management, and number of employees in Taiwan in the next three years.
Secondly, banks must maintain "sound development and sustainability competitiveness" in wealth management business which must be established based on a corporate culture of integrity and high-standard code of business conduct. Therefore, the Regulations require banks to establish five major management mechanisms including the "product suitability policy system and risk disclosure", "product review and monitoring", "liability for issuers of offshore financial products", "internal control, security, and fraud-prevention measures for digital financial services", and "risk management and code of conduct". The Board of Directors is also responsible for building an integrity corporate culture and establishing a comprehensive code of conduct (Culture & Conduct). For this purpose, the FSC will introduce the "senior manager accountability scheme". The senior manager of the business will be interviewed when a bank applies for permission to engage in the business operations. The senior manager will be required to explain his/her vision and commitment for the business in terms of the "corporate culture and code of conduct", "business management strategy and R&D capability", "business procedures and manpower management", and "fair treatment of customers". The FSC aims to create a system of accountability for business execution.
The FSC hopes that the opening of the business will greatly enhance banks'' capability of developing financial products, strengthen customers'' trust in the professional services and fair treatment of customers provided by banks, and help Taiwan''s wealth management industry increase competitiveness in the international financial market.
The FSC stated that the relaxation of the regulations and the introduction of related supervisory measures are expected to enhance the competitiveness of domestic wealth management business in the international financial market.
The Regulations relaxed regulations for a total of 8 financial products and services provided for high-asset customers including: foreign-currency bank debentures issued by banks may be connected to derivatives or structural bonds; banks may provide the aforementioned products through trusts or concurrent proprietary securities trading; DBUs may trade offshore structured bonds with high-asset customers through concurrent proprietary securities trading; offshore branch institutions or investees of domestic banks or securities firms may issue offshore structured products; OBUs may provide TWSE derivatives to high-asset customers; high-asset customers may be exempted from credit rating restrictions for investment in foreign bonds; banks may establish their own review procedures for offshore structured products; banks may provide financial products or consulting services based on the needs of high-asset customers. These relaxation measures allow banks to independently develop diversified financial products based on customer demands and increased their capability of developing financial products.
As the FSC relaxes regulations on business items, it will also adopt related supervisory measures to ensure the sound development of the business.
The first step is to establish standards for the banks'' application of business operations in accordance with the principle of differentiated supervision. The standards include compliance with "financial and business soundness" and "maintenance of a certain scale of wealth management business foundation". In terms of the scale of wealth management businesses, the FSC added provisions in Article 7, Subparagraph 2, Item 4 in the Regulations to encourage businesses to actively "attract investment and recruit talents". The criteria for the scale of assets under management may be adjusted to 70% of the requirement if the bank promises to increase substantive investments, scale of assets under management, and number of employees in Taiwan in the next three years.
Secondly, banks must maintain "sound development and sustainability competitiveness" in wealth management business which must be established based on a corporate culture of integrity and high-standard code of business conduct. Therefore, the Regulations require banks to establish five major management mechanisms including the "product suitability policy system and risk disclosure", "product review and monitoring", "liability for issuers of offshore financial products", "internal control, security, and fraud-prevention measures for digital financial services", and "risk management and code of conduct". The Board of Directors is also responsible for building an integrity corporate culture and establishing a comprehensive code of conduct (Culture & Conduct). For this purpose, the FSC will introduce the "senior manager accountability scheme". The senior manager of the business will be interviewed when a bank applies for permission to engage in the business operations. The senior manager will be required to explain his/her vision and commitment for the business in terms of the "corporate culture and code of conduct", "business management strategy and R&D capability", "business procedures and manpower management", and "fair treatment of customers". The FSC aims to create a system of accountability for business execution.
The FSC hopes that the opening of the business will greatly enhance banks'' capability of developing financial products, strengthen customers'' trust in the professional services and fair treatment of customers provided by banks, and help Taiwan''s wealth management industry increase competitiveness in the international financial market.
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- Update： 2020-08-14
