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September 27, 2019
Financial Services Agency

Update on Progress toward Further Efficiency and Transparency in the Screening Procedures for Licensing and Registration of Financial Businesses

 Since the 2016 fiscal year, the Financial Services Agency (FSA) has indicated its policy direction to “execute proper progress management for registration/licensing procedure by list method for greater efficiency and transparency of financial regulation,” and has announced its action plan and specific initiatives.*
*https://www.fsa.go.jp/en/news/2017/20170210-1.html
  https://www.fsa.go.jp/en/news/2017/20171107.html
  https://www.fsa.go.jp/en/news/2018/20180604.html (FSA website)
 
Major initiatives since the last announcement on June 4, 2018, are as follows:
○ From the viewpoint of reviewing report frequency and abolishing reports:
 ・Abolished “Follow Up on Foreign Exchange Derivatives for Small- and Medium-sized Businesses” report
 ・Abolished “Profiling-related Material (other securities disposed by sale within the fiscal year)” report
 ・Suspended “Status of Implementation of Loan Condition Changes” report*
   *https://www.fsa.go.jp/news/30/ginkou/20190628-3.html
 ・Revised ordinances related to “Unified Disclosure of Nonperforming Loans”*
   *https://www.fsa.go.jp/news/30/20190531_NPL/20190531_NPL.html
○ From the viewpoint of promoting greater efficiency, acceleration and transparency of licensing/registration procedures:
 ・Published points to note and forms when applying for registration related to electronic payment services on the FSA website (https://www.fsa.go.jp/common/shinsei/dendai/index.html)
 ・Published the registration screening process of virtual currency exchange service providers on the FSA website (https://www.fsa.go.jp/news/30/virtual_currency/20190111.html)
 
Furthermore, in the program year 2018, in “Assessments and Strategic Priorities 2018”, the FSA has been indicating its policy of “Investigating the Reinforcement of the System to Accept Objections from Financial Institutions for the licensing/registration procedures.” Last November, the FSA took a survey of financial institutions that have been registered regarding examination response of the relevant authorities.
 
○ The questionnaire was sent to over 130 financial institutions, and 96 replies were received as of the end of this May. The response rate of the questionnaire was approximately 70%.
 
○ The questionnaire contained the following five questions. Responses were numbered from 1 to 4, with 1 being the highest rating.
1. Did you receive an easy-to-understand explanation of the application procedure (including how to fill out the written application)?
2. Did you find that consideration was taken to avoid the task of filling out and submitting the written applications being overly burdensome (e.g. whether or not considered the scale and location of the Applicant)?
3. Did you receive an easy-to-understand explanation of the main points of the examination (e.g. systems which should be prioritized for establishment)?
4. Was the viewpoint of the examination reasonable (e.g. whether or not the unified opinion of the organization being indicated, but not the opinion of the individual person in charge)?
5. Did the person in charge of the examination quickly answer the applicant’s inquiries, where there were no special circumstances?

○ The average score of responses was 1.5, with the breakdown as follows:
  Respondents who answered 1 Respondents who answered 2 Respondents who answered 3 Respondents who answered 4 Average score
Q.1 60 31 1.4
Q.2 52 32 11 1.6
Q.3 57 34 1.5
Q.4 58 33 1.5
Q.5 72 19 1.3
Total 299 149 26 1.5

○ In the free answer section, regarding examination response of the relevant authorities, positive comments included “response was good, and we were able to make smooth progress with examinations,” while comments on points for improvement included “We felt there were duplications in the material we were requested to provide.”
 
We intend to use the answers and opinions we have received in our future financial administration to make the examination process more efficient.
 

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