The legislative Finance Committee passed the first reading of the draft of the Financial Supervisory Board Law (金融監督管理委員會組織法) yesterday.
Following the passage of the Financial Holding Company Law (金融控股公司法) in July -- which is expected to spur consolidation among Taiwan's more than 500 banks, brokerages and insurance firms -- the Legislative Yuan added a "sunrise clause," meaning that it won't take effect until a proposed Financial Supervisory Board is created. The board would have broad supervision over the finance industry and lawmakers have promised to pass legislation allowing for its creation by Nov. 1. Until then, no licenses for holding companies will be issued.
Currently the regulatory bodies for the banking, insurance and securities industries are under the Bureau of Monetary Affairs, the finance ministry's Insurance Department and the Securities and Futures Commission respectively. In addition, financial examinations of banks is separated into the Ministry of Finance, the central bank and the Central Depository Insurance Co.
The Finance Committee also passed a resolution requesting that the Ministry of Finance organization law amendment be submitted to the Legislative Yuan within one month. One possible outcome of the new law is that the Ministry of Finance and Directorate General of Budget, Accounting and Statistics could be merged into one agency. The Executive Yuan is currently considering the final outcome.
According to the draft, the budget and personnel system of the supervisory board would be independent, but the new agency would still be under the supervision of the Legislative Yuan.
Funding for the new regulatory body would come from two sources: the government budget and fees levied on the financial sector. For example, according to the draft, insurance companies would have to contribute from 0.03 percent to 0.1 percent of its annual revenue to the new agency.
Several controversial issues remain in the draft, including whether financial examination staff in the Central Depository Insurance Co and Central Bank should be transferred to the new agency. Negotiations between political parties are expected before the draft proceeds to the second and third reading.
There are 16 countries in the world which have already adopted one all encompassing supervisory agency for the finance industry.
The draft for the financial supervisory board was first proposed by the KMT administration years ago, but since a number of controversies regarding its structure and supervision power generated opposition from both the administrative and legislative arms, the draft has been postponed until now.
RSS