Financial Supervisory Commission (FSC) Chairman Wellington Koo (顧立雄) yesterday said that the commission would continue to streamline its regulatory efforts as the amount of assets managed by the industry expand and become more complex, while outlining the goals of his office for this year.

Last year, the financial sector accounted for 6.82 percent of the nation’s GDP, up from 6.53 percent in the previous two years, Koo said during a pre-Lunar New Year holiday news conference in Taipei.

Continued growth in the sector has inevitably led to increased loading on regulators, as well as a need for policy and legislative changes to be dealt with faster, Koo said.

As financial authorities cannot expect to increase their manpower and resources at the same pace as the industry’s expansion, the commission would continue to focus on elevating corporate governance standards and compliance, as well as internal control measures and risk management, he said.

“Many of the difficulties in regulating the financial sector stem from human nature,” Koo said, referring to the major policy changes the commission has been working toward since his appointment in September last year.

He added that the commission has established comprehensive whistle-blower protection rules, as employees often choose to remain silent or help to conceal the wrongdoings of their superiors.

Koo acknowledged that his previous focus on drawing boundaries in the financial sector to prevent risk contagion had been lacking in consideration for human nature.

Koo has been a major proponent of the separation of financial institutions and industrial firms, as well as separation between peers in the financial sector, referring to a number of high-profile proxy fights contending for board-of-director seats throughout last year.

“We are still drafting amendments aimed at enforcing separation and boundaries, but it is still too early to disclose details at this time,” Koo said.

He said that the commission would not scrutinize stock purchases by buyers who are not seeking board seats and have a stakeholding of less than 10 percent, as those could be considered simple investment activities.

However, non-financial companies would be limited to investing in no more than one financial company, he said.

While the commission is planning to tighten rules on appointing legal persons as corporate directors or supervisors, the commission would not consider limiting the voting rights of majority shareholders.

Meanwhile, Koo said that the nation’s insurers posted profits of NT$130.7 billion (US$4.42 billion) last year, far lower than estimates of NT$160 billion, due to a staggering NT$170 billion in foreign-exchange losses.

The financial sector last year posted profits of NT$535.83 billion, up from NT$488.9 billion in 2016, but was unable to best its highest record of NT$561.2 billion set in 2015, according to the commission’s tallies.

Source: Taipei Times