The Financial Supervisory Commission (FSC) was established on 1 July 2004, a central government agency established under the Executive Yuan, as the competent authority responsible for development, supervision, regulation, and examination of financial markets and financial service enterprises in Taiwan. The FSC seeks to ensure safe and soundfinancial institutions, maintain financial stability, and pro- mote the development of ourfinancial markets. Since its establishment, the main goals of the FSC have been to create a sound, fair, efficient, and internationalized environment for financial industry, strengthen safeguards for consumers and investors and helpfinancial industry achieve sustainable development.
3.2.1 Missions
Subject to the “FSC Organic Act,” the Executive Yuan hereby establishes the Financial Supervisory Commission (“the FSC”) to promote sound business man- agement at financial institutions, maintain financial stability, and facilitate the development offinancial markets. Pursuant to Article 2 of the“FSC Organic Act,” the FSC is the competent authority for development, supervision, regulation, and examination of financial markets and financial service enterprises. The term of
“financial markets” includes the banking market, bills market, securities market, futures and derivatives market, insurance market, and their respective settlement systems. The term of “financial service enterprises” includes financial holding companies, the Financial Restructuring Fund, the Central Deposit Insurance Corporation, banking enterprises, securities enterprises, futures enterprises, insur- ance enterprises, electronic financial transaction enterprises, and other financial service enterprises. However, the Central Bank shall be the competent authority in charge of the bank payment system.
3.2.2 Organizational Structure
The FSC is a central government agency established under the Executive Yuan as the competent authority responsible for financial supervisory policies and busi- nesses, and it carries out its duties independently in accordance with the law. The chairperson of the FSC is a minister appointed by the President on the recom- mendation of the premier. The FSC has two vice chairpersons, both appointed by the President on the recommendation of the Premier, and 6 to 12 commissioners.34 The FSC comprises four bureaus (banking, securities and futures, insurance, financial examination), four departments (planning, international affairs, legal affairs, and information management), four offices, a government-owned business (the Central Deposit Insurance Corporation) and two Representative Offices (in New York and London).
3.2.3 Responsibility
Pursuant to Article 3 of the“FSC Organic Act,”The FSC shall be in charge of the following matters:
1. Financial systems and supervisory policies.
2. Prescribing, amending, and repealingfinancial laws and regulations.
3. Supervising and regulating the following matters in connection with financial institutions: establishment; voidance; revocation; change; merger; business suspension; dissolution; and approval of business scope.
4. Development, supervision, and regulation offinancial markets.
5. Examination offinancial institutions.
6. Examination of matters relating to public companies and securities markets.
7. International financial matters.
8. Protection offinancial consumers.
9. Enforcement of financial laws and regulations, punishment of violators, and handling of matters related thereto.
10. Collection, processing, and analysis of statistical information relating to financial supervision, regulation, and examination work.
11. Other matters relating to financial supervision, regulation, and examination work.
4 Special Institutions for Financial Consumers Protection 4.1 Financial Ombudsman Institution (FOI)
The FOI is positioned to resolve financial services disputes in a fair, reasonable, quick, and effective manner to protect the rights and interests offinancial con- sumers. Its first mission is to build the confidence of financial consumers in financial institutions. It does so by acting as a filter to eliminate inappropriate business practices while promoting positive development and influence so as to preventfinancial services disputes. In addition,financial institutions can also take advantage of the FOI’s well integrated and categorized educational materials to establish correct business conduct and training methods for employees in the financial industry, and enhance the quality of their services.35
4.1.1 Missions
Thefinancial products and services that financial consumers purchase fromfinan- cial services enterprises are becoming increasingly diverse and ever more complex and specialized. This has resulted in a real asymmetry betweenfinancial consumers
and financial service enterprises in terms of financial strength, information, and expertise. In the event of afinancial consumer dispute, the consumer mayfind that seeking a remedy through litigation is not worth the cost in time and money. For this reason, it is necessary to provide financial consumers with a professional dispute resolution scheme other than litigation, and that further is fair, reasonable, quick, and effective. In the past, financial consumer disputes in Taiwan were handled by the competent regulatory authority, an industry association, or a financial industry self-regulatory organization. There was no single, integrated entity with statutory authorization to handlefinancial consumer disputes, so it was necessary to enact a special law for the handling of civil disputes involvingfinancial products and services.
The Government enacted the Financial Consumer Protection Act (FCPA) in 2011 to protect the interests offinancial consumers and to fairly, reasonably, and effectively resolve disputes onfinancial consumer services, thereby reinforcing the confidence offinancial consumers in markets and promoting sound development of financial markets. In doing so, the FSC took into reference the operational scheme of the United Kingdom’s Financial Services and Markets Act, the FOS of the UK, and Singapore’s Financial Industry Disputes Resolution Centre Ltd (FIDReC), as well as related domestic legislation.
The Financial Ombudsman Institution (FOI) was established in 2011 pursuant to the Financial Consumer Protection Act (FCPA) as an independent incorporated foundation to fairly, reasonably, and effectively resolve disputes betweenfinancial consumer and financial services enterprise, with the funding from the govern- ment.36 The FOI formally began operating on 2 January 2012 as a scheme with particular duty of handlingfinancial consumer disputes and strengtheningfinancial consumer protection.37
4.1.2 Ombudsman Committee
To resolve financial services dispute, the FOI has established an Ombudsman Committee in accordance with the FCPA, as an alternative system for financial services dispute resolution with credibility. All members are selected from among scholars, practitioners, and other impartial persons who possess relevant expertise or professional experience, and are appointed after their nominations have been submitted to and approved by the FSC.38The Committee’s procedures for handling disputes can be divided into three stages: i.e. filing complaints, mediation, and ombudsman service. All stages are designed to resolve disputes fairly, reasonably, quickly, and effectively to protect the interests offinancial consumers.39
4.1.3 Financial Education and Awareness
In addition to handlingfinancial consumer disputes, the ombudsman body shall also conduct education and awareness programs for financial services enterprises and
financial consumers to ensure that financial services enterprises and financial consumers all have a full and correct understanding of financial consumption principles as well as the rights and obligations that arise in connection with a financial consumption relationship, thereby effectively averting the occurrence of financial consumer disputes.
4.1.4 Features of Ombudsman Scheme
Thefinancial consumer ombudsman scheme has the following features:40
1. Efficiency: The Regulations Governing Ombudsman Procedures provide that the FOI must render an ombudsman decision within 3 months after accepting an ombudsman case. The deadline may be extended by 2 months at most. This is faster than ordinary civil litigation procedure.
2. Low Cost: The FOI emulates the scheme of the UK’s Financial Ombudsman Service (FOS) in that all services tofinancial consumers are free of charge. This allows consumers to make extensive use of its alternative dispute resolution scheme to resolvefinancial consumer disputes.
3. Effectiveness: Pursuant to Article 29 and 30 of the FCPA, as the financial services enterprise has expressed through prior written consent of its intention to be bound by the ombudsman decision which involves disputes incurred from an investment product with the amount of NTD 1 million or less, and disputes incurred from a non-investment product with the amount of NTD a hundred thousand or less, once the ombudsman decision rendering the pecuniary award within the above-mentioned amount has been accepted by the consumer, the ombudsman decision becomes binding and the case is deemed resolved. The consumer may request the FOI to submit the ombudsman decision to the court and for its approval. Once the approval is rendered, the ombudsman decision will have the same effect as a final court decision. Thus, despite being fairly streamlined, the ombudsman procedure does not lack effectiveness.
4. Fairness and Reasonableness: The principle of fairness and reasonableness set out in Article 20 of the FCPA is one of the important features of the FOI’s ombudsman scheme. According to this principle, after weighing the rights and obligations of both parties to a case, the FOI may render an ombudsman decision that is more flexible than a court judgment, or, in the absence of applicable legal provisions, a decision based on the principles of equity and jurisprudence.
4.1.5 Future Outlook
At present, the FOI has a dispute resolution rate of greater than 50 percent. This initial result shows that the government is progressively achieving its policy goals in promotingfinancial consumer protection. In the future, it seems that the role of
the FOI will grow in importance, in line with the aspirations of the financial industry, consumer groups, and the relevant government authorities. If the FOI can continue to improve its efficiency and effectiveness in operation, the policy goals initiated by the FCPA can be expected to achieve in respect of protectingfinancial consumers, reinforcing their confidence in the markets, and facilitating the sound development of thefinancial markets
The robust functioning of its alternative dispute resolution scheme has enabled the FOI to resolve average over 2000 financial disputes (including complaints, mediations, and ombudsman cases) annually since its establishment in 2012. This number exceeds the number of cases resolved by courts at any level, highlighting the performance of the FOI while also demonstrating a maturing awareness amongst financial consumers that they can turn to the financial consumer ombudsman scheme to resolve disputes.