2011 marked the 100th anniversary for founding the Republic of China, thus a year worthy of celebrating. For our financial services sector, it was a particularly important year.
Despite the impact of the eurozone debt crisis, an unexpectedly sluggish global economic recovery, and problems plaguing the efforts of some sectors of the Taiwan economy to achieve industrial upgrading, our domestic banks nevertheless managed to post pre-tax earnings in excess of NT$200 billion, while their average NPL ratio fell to 0.43% and their average NPL coverage ratio went up to 251.83%. All these figures are the best they have been in more than a decade. However, it cannot be denied that the global economy and financial markets continue to face uncertainty. Moreover, the Basel Committee on Banking Supervision (BCBS) has required the adoption of new capital adequacy requirements from
In order to better protect the interests of financial consumers, we have shepherded a "Financial Consumer Protection Act" (FCPA) through to enactment by our legislature, thus marking the beginning of a new era in the development of our financial services industry. The FCPA was promulgated by the President on 29 June 2011 and entered into force on 30 December. Moreover, the Financial Ombudsman Institution (FOI), a financial consumer dispute resolution body which was established upon the authority of the FCPA, commenced operations on 2 January 2012. The FSC will continue overseeing the FOI to ensure that it acts in line with the legislative intent of the FCPA by working in a professional, impartial, and proactive manner to handle financial consumer disputes, so as to win public trust.
In addition, an amendment to "Securities and Exchange Act" was promulgated on 4 January
We also completed an amendment to the "Insurance Act" in 2011, key points of which include the following: (1) life insurance enterprises engaged in foreign-currency denominated non-investment life insurance business are now allowed to apply to the competent authority for permission not to count investments made in connection with this type of business against the quota for their total foreign investments; and (2) all insurance agencies and insurance brokerages bigger than a certain size are required to establish internal control and internal audit systems in order to ensure sound development of the insurance industry. In addition, the need for prudential supervision and observance of financial accounting principles must be properly balanced with the business needs of insurers, the FSC established a foreign exchange volatility reserve mechanism in late 2011. Under the mechanism, life insurers since 1 March 2012 have had the option of regularly setting aside provisions to their foreign exchange volatility reserve to establish a buffer against foreign exchange volatility. The FSC has also adopted a coordinated set of related measures designed to afford life insurers greater flexibility in their efforts to manage currency risk and reduce costs, thereby achieving stronger financial footing.
2011 was also a very good year for cross-strait financial ties. The FSC and the mainland''s China Banking Regulatory Commission established the Cross-Strait Banking Supervisory Cooperation Platform, thus inaugurating a framework for systematic, regular meetings between supervisory authorities from the two sides. The two sides have met twice so far, and have already helped the mainland branches of six
To promote sound development of our financial services industry, the FSC has adopted a set of "financial services development" objectives and strategies, and these have been incorporated among the main policy focuses of the government''s "Golden Decade, National Visions" plan. Looking to the future, the FSC will continue implementing a series of initiatives in line with the Golden Decade plan and the financial services development strategies. In this regard, we have identified "the development of financial services with special cross-strait characteristics" and "development of a Taiwan-centered Personal Financial Planning Platform" as the two main strategies for developing our financial services industry. By developing financial services with special cross-strait characteristics, we hope to see domestic financial services firms: (1) make use of cross-strait economic and trade activities as a foundation for integrating their domestic branches, overseas commercial branches, and their commercial presences in the mainland; and (2) plan for the development of services related to the needs of Taiwan-invested enterprises in the mainland. By developing a Taiwan-centered Personal Financial Planning Platform, we hope to achieve the goal of "getting the money of our citizens into domestic financial institutions, where it is handled by our citizens and invested globally to obtain maximum returns for our citizens."
Yuh-Chang Chen, Chairman
Financial Supervisory Commission (FSC)