Sat, Feb 10, 2018 - Page 12 News List

Concerns voiced, but FSC stands by regulatory sandbox

By Ted Chen  /  Staff reporter

The Financial Supervisory Commission (FSC) yesterday stood by its decision to contain risks associated with experimental financial products in a regulatory sandbox, despite industry concerns.

The commission has set the maximum exposure for each experimental product at NT$100 million (US$3.4 million), as well as limiting it to certain types of financial products and services.

Consumer loans are limited at NT$500,000, while costs for insurance policies must not exceed NT$100,000 and maximum insurance coverage is capped at NT$1 million, the commission said.

The prices of all other financial products and services may be no more than NT$250,000, it added.

The costs represent manageable risks that could be borne by consumers, FSC Chairman Wellington Koo (顧立雄) said at a public hearing with industry representatives to gather opinions on the Act on Financial Technology Innovations and Experiments (金融科技創新實驗條例), which was passed by the legislature in December last year.

“The objective of experimentation is not profit, but to test the viability of new products and services,” Koo said.

However, Taiwan Securities Association (券商公會) vice chairman Ted Ho (賀鳴珩) said that as brokerages can only charge a commission rate of 0.1425 percent on transactions, the maximum potential profits from a NT$100 million experiment would be NT$142,500.

Similarly, Professional Insurance Brokers Association (保險經紀人公會) vice chairman Wang Hsin-li (王信力) said that the limit on insurance coverage should be raised to NT$3 million, as the typical coverage amount of many existing personal insurance products is more than NT$2 million.

The commission has been focused on the banking and insurance sectors, Koo said, adding that it would continue to adjust its guidelines for other products, such as securities and insurance.

Products that have matured could be deducted from the maximum exposure quota, and companies and their customers could also sign waivers of liability provided that both parties are fully aware of the risks, Koo said.

The exposure limit also represents the maximum amount of liability that can be claimed from companies in the event of disputes, Koo added.

The regulatory sandbox’s assessment committee would decide whether to approve experimental products within 60 days, regardless of the outcome of ongoing talks on drafting an approval process, Koo said.

Due to a difficulty in finding enough financial technology experts to work on the assessment committee, it would not be realistic to require that all committee members be free of conflict of interest, Koo said, adding that they would serve for the full duration of the experiment, which could be extended to three years.

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