Press Conference by Kaoru Yosano, Minister of State for Economic and Fiscal Policy and Financial Services

(Excerpt)

April 18, 2006

Q.

In regards to the problem concerning misrepresentations in pamphlets used by non-life insurance companies in the solicitation for savings-type insurance, the results of surveys conducted by life and non-life insurance companies were submitted to the Financial Services Agency (FSA) yesterday. Among them, Nipponkoa Insurance has voluntarily revealed, in response to inquiries from the press, that there were misrepresentations. If possible, please explain the situation of other life and non-life insurance companies identified so far.

A.

I believe each company acts in good faith with respect to its customers. In form, the terms of the insurance policy constitute the agreement for the non-life insurance itself, but if a customer has been given the wrong impression by a pamphlet or other materials, the policyholder was misguided by what is written in the terms of the insurance policy. I therefore think there is a responsibility on the part of insurance companies to take proper remedial measures after the fact.

Q.

Today, the round-table conference at the FSA will compile an interim report on the money lending industry. In particular, the treatment of interest rates in gray zones is a problem at the moment, which is under the shared jurisdiction of the FSA and the Ministry of Justice. What are your views on this matter, and what kind of action will be taken in the future?

A.

Actually, I talked about various matters with Mr. Terada-the head of the Civil Affairs Bureau of the Ministry of Justice-at the end of last week. I suggested that the FSA administration staff and the Ministry of Justice have discussions on how to deal with the Law Concerning the Regulation of Receiving of Capital Subscription, Deposits and Interest on Deposits and the Interest Rate Restriction Law this week, as these Laws are under the shared jurisdiction of the FSA and the Ministry of Justice. He said he would be happy to do so.

However, the Law Concerning the Regulation of Receiving of Capital Subscription, Deposits and Interest on Deposits is actually a law under the jurisdiction of the Criminal Affairs Bureau of the Ministry of Justice, so I would like to have talks with the Criminal Affairs Bureau as well. This is because what was intended by the legislation at the time of enactment inevitably appears to have been gradually modified by precedents set by the Supreme Court. If the Supreme Court has presented a certain approach through such precedents, the government, especially the legislature, has the responsibility and obligation to seriously consider how to deal with it.

Q.

Allow me to confirm this, are you basically inclined to eliminate interest rates in gray zones?

A.

It was not my intention to make you jump to such a conclusion-to begin with, opinions will be expressed at today’s round-table conference. It is the responsibility of the FSA administration staff to compile a summary of various opinions expressed at the round-table conference as accurately as possible, without fabricating anything. In regards to whether or not a policy direction will be determined at the time, you will probably have to read it and think about it, as there will be majority opinions and minority opinions.

On the other hand, there is an opinion held by the Research Commission on the Finance and Banking Systems of the Liberal Democratic Party, in addition to precedents set by the Supreme Court. From among them, we must determine which approach would be in the interests of social justice step by step.

(End)