Financial Sector

September 2007

FSA Seeking To Let Banks Sell All Types Of Insurance From Dec
The Financial Services Agency said Tuesday that it plans to fully deregulate the sale of insurance products at banks as scheduled in late December after finding no significant problems involving banks' current sales practices. The financial watchdog will negotiate details with the ruling and opposition parties as well as the insurance industry, but may face some hurdles before it can reach a final determination. Before giving banks the greenlight to sell all types of insurance products, the agency needs to confirm that banks have adequate measures in place to prevent coercive sales practices, such as strong-arming loan customers into purchasing policies. Complaints filed with the FSA pertaining to banks' insurance sales came to 127 incidents -- 0.5% those of the insurance sector as a whole -- since December 2005, according to a report the agency submitted Tuesday to the Financial System Council. Just 17 of these were about coercive sales practices. In addition, the FSA imposed no administrative penalties on banks for illegal practices related to their insurance product sales. Reports of sales tactics that were improper but still legal came to 91 incidents -- 2.2% those of the insurance sector as a whole. The FSA also found that banks cited for problems in past inspections had addressed their issues. Based on the results presented in the report, "there is nothing to warrant a change in regulations regarding the timeline for the planned full deregulation," an FSA official told a news conference. Some Financial System Council members said they supported the FSA's plan to carry out the deregulation as scheduled. But some members with insurance industry or labor union backgrounds urged caution, citing instances of problems that were not included in the report. The ruling Liberal Democratic Party's Research Commission on the Finance and Banking Systems plans to hold a meeting Wednesday to discuss bank sales of insurance products. Senior Vice Minister for Financial Services Akihiko Yamamoto, who attended the council meeting, urged further discussion after the release later this month of the results of an investigation into nonpayment of valid insurance claims by life insurers. If the FSA cannot win support from lawmakers, it may be unable to implement the full-scale deregulation of insurance policy sales by banks as planned. (The Nihon Keizai Shimbun, September 19, 2007)