Regulator invites foreign companies to pension market

2014-03-04 16:47

Regulator invites foreign companies to pension market

By Na Jeong-ju, Park Ji-won

Financial Supervisory Service (FSS) Governor Choi Soo-hyun said Tuesday that the country’s aging population will provide new business opportunities for foreign financial firms operating here.
“Our pension assets continue to grow, creating a demand for new products and services,” Choi said at the annual FSS Speaks forum in Seoul. “This will give new business opportunities to foreign financial firms, which have world-class investment and asset management know-how.”
The remarks came as the government is moving to set up measures to foster the pension market. Financial Services Commission Chairman Shin Je-yoon earlier vowed to ease rules on pension management by private companies to brace for an “aging society with the average life expectancy of 100 years.”
Officials say the basic concept of this project is to make more people subscribe to pension funds and strengthen financial education for elderly citizens. Banks, insurance and asset management firms will also be encouraged to develop more products and services tailored for retirees. The government plans to unveil concrete measures this year, they said.
“We will seek advice from foreign firms in enhancing the pension system. We hope they will play a pioneering role in creating new demand from the aging society,” an FSS official said.
Commenting on the fraud cases involving Tongyang Group and the recent massive consumer data theft case, Choi urged foreign financial firms to take the lead in enhancing the rights of consumers.
“Trust is the very source of business competitiveness, even more so for financial firms,” Choi said. “Advancing consumer protection will benefit your business because these policies will increase your customer loyalty, market share and profitability. I hope your interest and involvement in advancing consumer protection will continue.”
Choi also vowed to ease regulations for foreign firms.
“President Park Geun-hye pledged earlier to make Korea the best country to invest in, in the world,” Choi said. “We are working to identify and remove barriers — even invisible ones — that get in the way of creative and productive activities of foreign financial firms.”
He said the FSS will restore order and discipline to the market by cracking down on unfair business practices and activities that can “no longer be justified.”
The regulator launched the FSS Speaks forum in 2008 to better communicate with foreign financial firms operating in Korea.
This year’s event drew some 340 participants, including Stephen Bird, CEO of Citibank Asia Pacific and Jan van den Berg, head of Prudential International Insurance Asia Region.
Van den Berg said he believes that Korea could become a “role model” for the retirement industry in Asia if it successfully implements policies for its aging population.
He urged the Korean government to consider new tax policies to create greater incentives forKoreans to save for retirement through lifetime income annuities, and insurance products that are designed to provide longevity risk protection.
“Korea’s elderly experience very high suicide rates, more than 4 times the OECD average. Today, one-half of South Korea’s elderly live in relative poverty. This is a hard truth,” he said. “Korean parents have invested strongly in the education of their children, and have done little to prepare for their own retirement.”
Citibank’s Bird said Korean regulators are facing important tasks of meeting demand from global investors as the country’s economic size is getting bigger and its firms are more involved in global markets.
“Resolving cross-border issues and agreeing to a certain degree of harmonization of regulations will be one of the most difficult and important tasks for regulators going forward,” Bird said. “Business and regulators and industry associations need to work together to ensure that workable regulations are introduced and to benefit the end clients.”
Bird, however, said regulators need to tread a “fine line.”
“In recent years, the growth of the financial system has been largely fueled by less-regulated institutions,” he said. “A lot of the regulations being introduced are extremely well intentioned and are positive. The challenge doesn’t necessarily lie in the regulation itself, but lies in the local implementation of regulations and the harmonization of regulations across borders.”