No more phone calls from money lenders

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The National Assembly approved Revisions to the Enforcement Decree of the Act on Registration of Credit Business, etc. and Protection of Financial Users and the revised act will be put into force from September 19, 2014.

Upon revision of the act, provincial governors, city mayors, prosecutor general, national police chief, and FSS governor are authorized to request the Ministry of Science, ICT & Future Planning for suspension of phone numbers used for exaggerated or false advertisement of credit business and impose fines against them.

The revised act is expected to resolve financial consumer’s inconvenience of receiving and answering unwanted phone calls from credit businesses.

Financial Education for Students

In February, the FSC and OECD co-hosted an international symposium on financial education to share opinions and experiences of member countries on the issue. Domestic financial experts gathered once again at Symposium to Facilitate Financial Education on September 2 to discuss how to strengthen financial education for students.

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“What struck me most,” said FSC Chairman Shin Je-Yoon in his congratulatory speech during the event, “was that other countries are educating students about financial issues since they were small. It is time for Korea to do the same.”

Finance is very closely linked with our everyday life. We are faced with making financial decisions in every important moments in our life; from making loans to buy home, to buying insurance policy to prepare for unexpected accidents and pension products for post retirement life. Since such decisions inflict crucial impact on our life, to be equipped with profound financial knowledge is very important.

Moreover, as the structure of financial products are getting more and more complex, investing in those instruments without perfect understanding may lead to massive loss and make one prone to financial frauds. One might end up in losing everything he or she earned.

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Despite the government’s committed efforts to raise financial awareness, it is true that our financial education system falls behind compared to that of the advanced economies such as the UK and US.

UK, will mandate students from 11 to 16 to complete financial education courses starting from this month. In the US, the government has set “Early Starts for Financial Success” as 2013 and 2014 financial education goal. Korea added financial issues in high school economics but the financial education still doesn’t reach out to elementary and middle school students.

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“I believe it is necessary to add financial subjects in curriculums of elementary, middle and high school,” mentioned Mr. Shin.
“We need to teach young students not only financial knowledges but also healthy attitude and habits related to finance.”

Financial education will enable students to make reasonable and wise financial decisions when they grow up. Moreover, reasonable financial practices of each individual will contribute to stabilizing national economy and financial system.

Block unwanted phone calls and emails from financial companies

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Do-Not-Call service is available for financial consumers from September 1. You can register phone numbers which you want to be automatically blocked or denied on www.donotcall.or.kr. Once registered, phone calls and emails sent from the respective financial companies will be blocked for 2 years. The service is only available for cell phones and smart phones. You have to call the respective financial company to block phone call, SMS, or email services for landline telephone.

Weekly Global Financial News (Aug 26-Sep 01)

India Economic Summit 2008

India’s growth speeds up in after-glow of Modi’s triumph, By Reuters, Published: Aug 29

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Narendra Modi’s election victory helped India’s lumbering economy register its fastest growth in two-and-a-half years for the quarter ending in June.

China foreign investment pattern changes as challenges grow, By Reuters, Published: Aug 26

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China’s foreign investment mix is changing, with portfolio investors buying more stocks but foreign direct investment falling to a two-year low on a slowing economy, rising business costs and anti-monopoly probes and crackdowns on foreign firms.

Modi to launch plan for every Indian household to have bank account, By Reuters, Published: Aug 27

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Prime Minister Narendra Modi will promise to provide a bank account for every Indian household when he launches a major initiative that could save billions of dollars in welfare spending and help mend strained state finances. In India, nearly two-fifths of its 1.27 billion people do not have a bank account, leaving them dependent on informal financing routes.

Japan’s Abe faces another bruising debate over raising sales tax, By Reuters, Published: Aug 28

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Prime Minister Shinzo Abe faces hard choices in coming months: whether to hike Japan’s sales tax again, raising the risks of damaging a fragile recovery, or to back off and shakes markets’ confidence in his commitment to curbing runaway government debt.

Brazil enters recession in election blow to Rousseff, By Reuters, Published: Aug 29

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Brazil fell into a recession in the first half of the year as investment dropped sharply and the country’s hosting of the World Cup suffocated economic activity, a major blow to President Dilma Rousseff’s already fading hopes for re-election in October.

China banks seek new lending horizons as bad debts rise, By Reuters, Published: Aug 31

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Grappling with a slowing economy, China’s biggest banks are turning their back on mainstay borrowers like manufacturers and courting high growth industries such as healthcare, food and IT in a bid to boost revenue.

The insurance reform is a win-win for both consumer and insurer

1Mr. John Doe dropped his Smartphone. It got a huge crack on its screen. He rushed to the customer service center and they charged him 170 dollars. However, due to the Smartphone insurance for which he pays 2 dollars a month, it cost 10 dollars!

Ms. Jane Doe is paying a fixed monthly fee on her pension insurance. Her daughter was accepted to well-known university and Ms. Jane needs to pay big money for her daughter’s tuition. However, she has no money at the moment. She decides to cancel her insurance prior to the maturity date although she is charged substantial penalties.

The FSC announced that it will reform the current insurance policies to provide sound insurance services. Such move came as there are still concerns that insurance policies are difficult and complicated. Also, there has been little development in insurance policies compared to the speed of change in economy and demography. The FSC set forth “better regulations” and came up with three goals: building credibility, preparing for the future, and innovating insurance industry.

1. Build credibility by promoting public interest.

Insurance is too complicated which makes customers find it hard to compare different insurance products. In addition to that, insurance brochures which explain the coverage usually run to more than 15 pages. The FSC will simplify the contents to help customers enhance their understanding. In this way, customers can choose what is best for them from diverse options.

Moreover, the FSC will introduce a new system to manage insurance planners. Insurance companies should report their sales records to financial authorities and check past sales records when they hire new insurance planners. If there are enough data, incentives can be given to insurance planners who show excellent performances.

Smartphone insurances prevent customers from paying a huge amount of money when their phone is damaged or lost already exist. As such, the FSC is to allow insurance agencies to sell specific insurance products. For instance, you can purchase insurance for a laptop in electronics department or for an animal in veterinary clinic.

2. Prepare for the future with innovative insurance products

As mentioned above, when there is an unexpected expense such as medical or tuition fee, individuals can withdraw money within certain amount of rate, say 25%, from their pension plan before maturity date. This will help people maintain their pension insurance rather than cancelling it when they need big money.

Also, the FSC is considering the introduction of natural disaster bonds and weather insurances. Weather insurance is a type of insurance product which aims to help control the financial risk associated with exposure to weather conditions. For example, temperature insurances can be designed to protect people from damage due to either below or above normal temperatures. (i.e., ice-cream companies, agricultural industries)

3. Innovate insurance industry

It is hard to find insurance for elderly and disabled individuals. This is because they have higher risks which indicate the possibility of receiving insurance money. The FSC will discuss ways to vitalize insurance designed for them. The FSC is considering a way to allow extra charges to those people and pay the difference if they have shown low risks in a certain period of time.

 

New policies are receiving positive response from related organizations. Insurance companies are especially showing interests in weather insurances and natural disaster bonds. They said that they are ready to introduce weather insurances as soon as financial institutions set guidelines for them. The FSC and related organizations believe that these policies will improve customer satisfaction and boost the insurance industry at the same time.

FSC Chairman’s two-day on-site tour to promote technology finance and microfinance – part 2

On his second day of the two-day onsite tour, Chairman Shin Je-Yoon visited Jeonbuk University and Morene traditional market on Thursday.

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At Jeonbuk University Business Incubator Center, Mr. Shin met business entrepreneurs to promote government’s efforts to support business start-ups and young entrepreneurs. In particular, he emphasized that the government would provide financial assistance, consulting services, and business data throughout the whole business cycle of a start-up company.

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He added that the opinions raised during the meeting will be reflected when devising policies. Moreover, various policies will be prepared to encourage young entrepreneurs who are expected to become the key players to realize ‘creative finance.’

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Following the meaningful gathering in Jeonbuk University, Chairman Shin and the heads of financial corporations visited Morene traditional market located in Jeonju on the occasion of Chuseok holidays. He met with the local merchants to listen to hardships they are experiencing and various suggestions to be made on microfinancial policies. The government will continue to improve microfinancial policies that can actually do good to the merchants since traditional markets and mom-and-pop stores form the backbone of the Korean economy.

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The government will come up with a plan to improve the structure of microfinancial support in a more consumer-oriented direction in a near future based on the opinions gathered during the on-site tour.

FSC Chairman’s two-day on-site tour to promote technology finance and microfinance – part 1

The FSC has been committed to facilitate technology finance by establishing technology assessment systems such as Tech Credit Bureau(TCB) and Tech Data Base(DB). This time, Chairman Shin Je-Yoon set off for a two-day on-site tour to actually meet and listen to entrepreneurs of start-up companies and those related to technology finance.

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For a starter, Chairman Shin visited Pan-gyo Techno Valley, Korea’s Silicon Valley where promising technology firms are located, to share various opinions about ways to promote technology finance. Suggestions and ideas raised during the tour will be reflected on the government’s future directions for technology finance.

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Tomorrow, Mr. Shin will visit Jeonju University’s Business Incubator Center, Jeonju Morene traditional market, and Cheonan Employment Welfare Center.

Vice governor of the FSS, and heads of financial corporations such as Korea Development Bank, Korea Finance Corporation, Industrial Bank of Korea, and Export & Import Bank accompanied Chairman Shin during the tour.

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