Japanese
Janurary 5, 2018
Financial Services Agency

Call for comments in English on "JFSA’s supervisory approaches
-Replacing checklists with engagement-"

The Financial Services Agency(JFSA) has issued the English translation of its draft report  "JFSA's supervisory approaches" and calls for public comments in English by February 14, 2018.

Complete Report

This report aims to present how the JFSA intends to transform its supervisory approaches so that both the Agency and the industry could continuously benefit from the interaction between them and reform and innovate themselves, for the Agency to upgrade the quality of its supervisory activities, for the industry to enhance its performance, and for both to better contribute to the unleashing of the unrealized potential of the Japanese economy.

The existing supervisory approaches which rely on the elaborate system of checklists may lead supervisors and financial institutions to split hairs while ignoring the elephant in the room. Rigorous loan by loan review conducted by the Agency contributed to the resolution of the non-performing loan problems, but might not be effective in preventing the next crisis. Compliance checks repeated year after year by the Agency have made firms improve their internal control, but may also have worked to stifle their initiative to innovate.
 
A panel of experts commissioned by the JFSA, the Advisory Group on Supervisory Approaches, submitted a report “Transforming the JFSA's supervisory approaches” to the Agency in March 2017, and recommended the Agency to recast its existing supervisory approaches, which focus on backward-looking, element-by-element check on the compliance with formal requirements, into those based on substantive, forward-looking and holistic analysis and judgment. The panel also recommended the Agency to review if its approaches are consistent with the ultimate goal of financial regulation. The current report is the JFSA’s response to the panel’s report and describes how it intends to operationalize the panel’s recommendations.

How to Submit Comments

The Agency welcomes comments on all aspects of this report. Comments should be submitted to the Agency by 12:00 (JST), Wednesday, February 14, 2018, in English by e-mails to the address below or in Japanese by uploading through the link .
The JFSA may disclose comments it received if so requested. Please indicate at the top of your comment if you want to be anonymous in the case of such disclosure.
 

Email address: supervisory-approach@fsa.go.jp