The Financial Supervisory Commission (FSC) published the Trust 2.0- "The Promotion Plan for Full Functions of Trust Services" today with the aim of encouraging trust enterprises to enhance trust services and develop diverse trust businesses for all types of customers’ need.
The FSC elaborated that there has been a significant growth on trust assets in the trust industry since the Trust Enterprise Act passed in 2000. The trust enterprises have also gradually developed specific trust products which integrated with elder care and medical services.
However, as trust businesses are currently operated by financial institutions, trust departments have become the back offices which place orders and deal with transaction matters since banks began to develop wealth management services in 2004. Due to the allocation of their internal resources and job rotation scheme, it has not been easy for trust enterprises to develop diverse trust services and cultivate professional talents. Besides, considering the full spectrum of trust functions and flexibility in operations, the FSC launched the Trust 2.0 Plan in response to the aging society and declining birthrate. The FSC encourages trust enterprises to actively input adequate resources to restructure organization cultivate professional talent. In addition, Trust 2.0 also seeks to facilitate trust enterprises to integrate their internal resources while cooperating with outside entities in other sectors, in order to move away from their current over-emphasis on trust services for the purpose of wealth management, and instead develop a comprehensive type of trust business that provides customers with services tailored to their particular needs.
To realize Trust 2.0 Plan, financial institutions not only need to integrate their internal resources and related financial products, but also have to cooperate with related authorities and social welfare organizations. Moreover, they might also need to collaborate with other industries. Therefore, to build a consensus among different sectors, the FSC has called senior management of financial institutions for the consensus conference on August 10, 2020 to collect their opinions about trust services. The FSC also invited the Ministry of Health and Welfare, Ministry of the Interior, Trust Association, Bankers Association, Taiwan Financial Services Roundtable, and Taiwan Academy of Banking and Finance to join the ”First Trust 2.0 Implementation Work Group Meeting” on August 24. The attendees have discussed implementation details of the Trust 2.0 Plan including the following strategies:
1.    Vision of the Project: To integrate various other financial products or urban renewal plans, as well as to use idle public lands to build friendly residential area and encourage elderly citizens to be cared residentially. Besides, to link reverse mortgage services and insurance payments to develop elderly care trusts including related asset management to ensure economic security of customers. In addition, by cross-industry alliances, the financial institutions may provide customers with one-stop shopping services. Furthermore, to integrate securitization instruments to build diverse markets.
2.    Main idea of the Project: financial institutions may internally integrate their own resources to penetrate various financial products (including loans, wealth management, insurance, securitization, and other financial services). By cross-industry cooperation, financial institutions may externally expand their businesses to develop tailor-made trust services, and then provide customers with full functions of trust services.
3.    Implementation manner:
(1)    To ensure the project implementation to meet practices and retain its flexibility for dynamic review, the FSC has set up working groups and divided the themes of the project into four main pillars including "regulations and business development", "talent cultivation, education, and industry-academia cooperation", "cross-industry alliances", and "evaluation and reward mechanisms" for continuous discussions.
(2)    The Plan is set to run for two years and it will be reviewed for renewal upon expiry.
4.    Key measures:
(1)    Guide financial services firms to gradually elevate the functions of their trust departments and give them a more prominent position within their organizational structure: By means of legislation or self-governing regulations to guide financial institutions to implement internal organizational restructuring; to establish a trust business development strategy unit to expand trust business functions; to review the reasonableness of trust business development strategies periodically, as well as staffing, accountability and responsibilities, resources, annual targets, and proposing business development recommendations in order to provide a full spectrum of services through trust and financial instruments.
(2)    Amend the Principles for Review and adoption of Remuneration Mechanisms of Trust Enterprises: To guide financial institutions to integrate their internal resources and actively develop comprehensive trust businesses, the FSC will weigh the proportion and KPI evaluation indicators of trust businesses in institutional evaluations and implement fair evaluation schemes based on the level of contribution of the trust enterprise for integrated financial products.
(3)    Ease restrictions on the marketing and promotion of trust businesses: According to current "Rules Concerning Cross-Selling by Financial Holding Company Subsidiaries" and the "Banks, Securities Firms, Insurance Companies Apply for Approval to Jointly Promote Other Business' Products or Provide Relevant Services" related regulations, trust businesses are not allowed to be jointly marketed or promoted with other sectors. To help promote trust businesses, the FSC will evaluate the feasibility of deregulations.
(4)    Evaluate the feasibility of specialized trust companies establishment in Taiwan: Currently, trust businesses in Taiwan are operated by financial institutions including banks. To guide financial services firms to transform their business models from financial products selling into trust products tailored-made for customers, the FSC will evaluate the feasibility of specialized trust companies development in Taiwan.
(5)    Review regulations to enhance the governance of real estate investment trusts (REITs): Existing legislations or self-governing regulations are lack of procedures of beneficiaries' meetings organized by REITs. The FSC will clarify related regulations to enhance the governance of REITs and the protection of investor interests.
(6)    Coordinate and enhance the implementation of pre-sale house trust mechanisms: Although the Ministry of the Interior has established contract performance guarantee mechanisms, disputes involving pre-sale houses still occur from time to time. The FSC will discuss with the Ministry of the Interior on the approaches to enhance the governance of construction companies and the responsibilities of trust banks to strengthen the protection of the buyer's interests and reduce transaction disputes.
(7)    Formulate family trust legal framework and taxation environment: To help trust industry develop family trust businesses, and to help enterprises stabilize ownership and operate sustainably, as well as to resolve property succession issues, the FSC will consult related government agencies (including Ministry of Justice, Ministry of Economic Affairs, Ministry of Finance, etc.) for formulating family trust legal framework and taxation environment.
(8)    Encourage companies to provide employee welfare trusts: To help Taiwanese employees achieve economic independence after retirement, the FSC will put forward measures such as incorporating corporate governance indicators and formulating a reasonable taxation environment to encourage companies provide employees with welfare trusts as the third pillar for strengthening the pension reserve.
(9)    Promote the "Financial Advisors for Seniors" trust professional certification scheme: To organize a series of programs including fundamental knowledge of elderly psychology, behavioral and medical care, retirement trusts, family wealth succession trusts, and to provide caregivers with entire training for taking care of seniors and offer those seniors with property management, elderly trust planning, and other comprehensive services.
(10)    Promotion of the "Family Trust Advisors" certification scheme: To cultivate professional talents for family trust businesses development through talents sharing and resources integration within financial institutions, or consult with external experts such as accountants or lawyers, to guide local small and medium-sized enterprises to achieve sustainable operations through family trust planning services.
(11)    Cross-industry cooperation with social welfare organizations, elderly care organizations, and medical institutions: The Trust Association and trust enterprises will visit social welfare organizations, elderly care organizations, and medical institutions to seek the feasibility of cross-industry cooperation and gradually establish related mechanisms to develop trust services that meet customers’ needs.
(12)    To set up evaluation schemes to reward trust enterprises and high-performing employees: To encourage trust enterprises to actively input adequate resources to enhance the trust department functions and to develop comprehensive trust services, the FSC will put forward evaluation and reward mechanisms to provide incentives and reward trust enterprises and high-performing staff. Their performance and outstanding records will be disclosed to the public as role models for trust industry.
The FSC addressed that the promotion of the Trust 2.0 Plan involves various sectors, the FSC will cooperate with other agencies and it will also integrate financial industry associations, affiliates, trust enterprises, social welfare groups, and other industries. In addition to current measures, the FSC will continually launch new measures based on development of the society and market demand. The FSC hopes that the Plan may urge trust industry to fully demonstrate their functions, to provide the aging society with services needed, and to create a mutual benefited and win-win environment for the trust industry and our society.