The Executive Yuan passed the draft of Financial Holding Com-pany Law (金融控股公司法) yesterday, which will be submitted to the Legislative Yuan next week.
According to the draft, which will allow financial services companies to further diversify their business lines, there are three criteria for meeting the minimum requirements (shown in box on right).
An important feature of the draft is that after a financial group sets up a financial holding company, a consolidated financial and tax report from the parent company should be submitted. Currently, domestic financial groups must file separate financial and tax reports for each company or subsidiary.
Another breakthrough in the draft is that it permits joint-marketing efforts between various subsidiaries under a financial holding company.
Currently, a customer cannot go into a securities company and buy an insurance product. But in the future, people can purchase all financial service products provided by the same financial group at any of the group's subsidiaries.
The Executive Yuan, however, did not pass the draft for the Financial Supervisory Board Organization Law (
The financial supervisory board, if established, would be responsible for the regulatory work of the financial services industry, including banking, insurance, securities, futures and other related sectors.
Together with the draft of Financial Holding Company Law and the Financial Institutions Merger Law (金融機構合併法), which was passed by legislature at the end of last year, the three laws would become the pillars of recent financial reform efforts by the Chen Shui-bian (陳水扁) administration.
The financial supervisory board draft failed to receive a green light from the Cabinet yesterday because of varying opinions concerning the new agency's position within the government.
"Officials from various ministries agreed with the unification on the regulatory system of the financial service sectors.
"But one of the controversies on the financial supervisory board issue was regarding whether this new agency would be a government body responsible for policy-making or just for the execution of government policy," Su Tzen-ping (蘇正平), director general of the Government Information Office, said yesterday.
"There was no consensus reached during the meeting."
"We can take a number of existing financial supervisory board examples from abroad," Su said.
"Some of them combine the functions of policy-making and execution of government policy, while others separate the functions into other agencies. Both frameworks exist."
"The Executive Yuan would like to set up the supervisory board based on the framework of the Fair Trade Commission," Su said. "In the future, the finance ministry would be responsible for taxation, while the financial supervisory board would control most regulatory powers."
According to Su, the supervisory board would need some flexibility in both personnel and budget areas if it wants to run the agency as successfully as possible. But no consensus has been reached on this point, Su said.
The main controversy concerning the new agency resulted over its budget source.
The financial supervisory board would be the first government agency allowed to charge fees directly from the private sector, which means the new agency would not require budget supervision by lawmakers.
While such a framework is aimed at keep lawmakers from directly controlling the board, concerns over which institution will supervise the board have been raised.
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