The FSC formulated the Operating Guidelines for Application for Trial Business by Banks (Taiwan)

Elva Chuang

The Financial Supervisory Commission (hereinafter, the “FSC”) promulgated the Operating Guidelines for Application for Trial Business by Banks (hereinafter, the “Guidelines”) via the Jin-Guan-Yin-Kong-10802700400 Directive of June 19, 2019.  Consisting of 6 points, the Guidelines came into effect on the day of their promulgation.  The Guidelines are highlighted below.

Currently, the Statute for Financial Technology Development and Innovative Experimentation allows the financial business involving matters restricted by laws, regulations and directives to deal with the financial business by way of submitting the application of “innovative experimentation.”  In the past, a bank seeking to expand its business item which has been approved in different ways applied to the FSC for “trial business.”  Although the application mechanisms for “innovative experimentation” and “trial business” vary in nature and scope, still Point 1 of the Guidelines points out that the Guidelines are formulated to encourage innovation of banks and the provision of innovative financial products or services so as to enhance competitiveness and further the rights and interests of financial consumers and to put in place consistent regulations.

Point 2 of the Guidelines provides that the trial of business items for which application may be filed by banks (hereinafter, the “Trial Business”) shall be limited to the expansion of approved business items of the banks or business items stipulated under laws, regulations or directives and including other general items approved by the competent authority (e.g., service items for the automated service equipment under Article 7, Paragraph 4 of the Regulations Governing Off-Premises Automatic Teller Machines of Financial Institutions and other credit card business approved by the competent authority in accordance with Article 2, Subparagraph 2(7) of the Regulations Governing Institutions Engaging in Credit Business) or those which are not yet clearly regulated by technical operation guidelines which are still under development such as the Guidelines for Safety Control of Electronic Banking Business by Financial Institutions.

In addition, to help banks balance risk control and business innovation, Paragraph 4 of the Guidelines provides that the FSC shall have the authority to limit matters such as targets, business or trading volume, locations and duration, depending on the nature of the trial business.

Paragraph 5 of the Guidelines also provides that banks shall also pay attention to legal compliance such as information security protection and money laundering prevention and control, personal data protection and safeguards of customer rights and interests during the trial period.  After the trial is over, materials concerning the overall trial shall be submitted to the FSC, which will change such business into generic business based on the outcome of the trial business after formulating accommodating measures and relevant provisions.