(Bloomberg) -- Taiwan’s financial regulator is reviewing some of its current rules and practices amid criticism from local banks and insurers on the inconsistency and over-complication of its governance, according to people familiar with the matter.
The Financial Supervisory Commission has agreed to adopt more consistent standards during on-site inspections, the people said, asking not to be identified as the discussions were private. They pledged to amend rules and regulations to correct any missteps, said the people who participated in a private meeting earlier this month.
Local financial institutions, in particular life insurance companies, have complained about the layers of bureaucracy and outdated governance system that have led to inconsistencies in enforcement, contradictory orders, and delays of business activities, according to the people.
The Financial Examination Bureau will continue to take industry suggestions into account to further improve the inspection process, said Deputy Director-General Chang Tzu-ming, in response to request for comments. The bureau has released relevant principles three years ago, he added.
The issue is becoming more urgent as Taiwan is seeking to diversify its economy and become a center for asset management. Foreign money managers are increasingly interested in the market, bringing regulation issues to the fore.
While the changes will only take place after the FSC grants a formal approval by year-end, officials attending the meeting earlier this month have agreed to amend regulations, according to the people.
The FSC set up a task force in August to facilitate communications with the financial industry and academia. The watchdog said it will solicit suggestions from all parties, and adjust legislation and supervisory actions to enhance the competitiveness of the industry.
Taiwan’s life insurers hold more than $1 trillion of assets, but 80% is invested abroad due to lack of products at home. This has left the industry struggling with high hedging costs and mismatch in liabilities and assets, which have led to foreign exchange losses over the past few years.
In addition to regulatory improvement, the government has also stepped up efforts to roll out more products and deepen market opening including allowing the issuance of active exchange-traded funds, opening up the purchase of foreign virtual asset ETFs to professional investors, and increasing the number of stocks having futures trading at night.
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