“Proposed amendment to the’Financial Holding Companies Act’ to strengthen the responsibility of financial holding companies”

[Digital Today Reporter Kang Jin-gyu] Rep. Kim Han-jung (the Democratic Party) announced on the 17th that it has proposed an amendment to the’Financial Holding Companies Act’, which mandates financial holding companies to establish group internal control standards covering subsidiaries, etc.

The financial holding company diversifies its business into non-banking sectors such as securities and insurance, and expands linkage between subsidiaries within the group, and operates organizations by business sectors such as digital, asset management, corporate finance, and global. Accordingly, important decisions of the Financial Holding Group are being made by the holding company, not by individual subsidiaries.

Rep. Kim Han-jung said, “The current Financial Holding Companies Act stipulates internal control and risk management for subsidiaries as one of the major tasks of financial holding companies, but there is no specific content.” “There is almost no internal control system at the group level.”

Rep. Kim Han-jung said, “This amendment makes it mandatory for financial holding companies to establish group internal control standards covering subsidiaries, etc., while clearly stipulating tasks and responsibilities related to group internal control such as the board of directors, representative directors, and compliance officers of financial holding companies. I did” he explained.

The amendment contained the content that financial holding companies should prepare internal control standards for the group, including subsidiaries, and subsidiaries, etc., should prepare their own standards according to the internal control standards. In addition, the content that the board of directors of a financial holding company should deliberate and decide on matters such as revising the internal control standards and establishing policies to comply with the internal control standards of executives and employees such as financial holding companies.

According to the amendment, the CEO of a financial holding company must prepare effective preventive measures to prevent violations of the group’s internal control system, and oversee the group’s internal control system, such as a faithful inspection of compliance and disciplinary action in case of violation. The financial holding company’s compliance officer must also perform internal control tasks and report the results to the CEO or executive officer.