Silviase/jgov_v1.4_full_ann huggingface dataset:
## (4) Support for business improvement to SMEs

The FSA considered the program year 2013 crucial for financial institutions to start their full scale support for improvement of SMEs' business profiles, and reinforcement of business structures. Comprehensive measures as the exit strategy of the SME Act are being taken under strong public-private cooperation. Considering this, each financial institution should work towards real improvement of SMEs' business profiles, by providing greater support for business improvement and recovery, such as support for devising highly effective business rehabilitation plans through performing an active consulting function while coordinating and cooperating with outside experts and other financial institutions.

### 77. Risk management and stability of regional financial system

It is vital for regional financial institutions to ensure robust and comprehensive risk management thoroughly under appropriate management control (governance). This is necessary not only for the financial soundness of each financial institution and overall stability of the financial system, but also for regional financial institutions to fully perform financial intermediary functions by providing a stable supply of funds to support the growth of private companies as well as the real economy in a changing environment. Considering this, the FSA continued to analyze and supervise from the macro-prudential perspective, while enhancing its own risk sensitivity as a supervisor. On the other hand, the FSA encouraged voluntary efforts by individual financial institutions with focused attention on: (i) risk areas which should be focused on; (ii) improved risk management technique; and (iii) enhancement of financial foundations.

### 78. Improvement of customer protection and convenience for users

Improving customer protection and increasing convenience for users in financial institutions not only contributes to developing a sound national economy, but also helps to stabilize the Japanese financial system by enhancing citizens' trust in financial institutions. It is important for financial institutions to ensure the protection of customers' interest and a sense of security and trust. In doing so, managers of a financial institution should fully provide leadership in establishing a solid business system, while implementing measures such as strict control of customer information, prevention of the abuse of dominant bargaining power, and management of conflicts of interest. For customer protection, particularly, nominal compliance with laws is insufficient; financial institutions should fully understand the effects and purposes of specific laws, identify compliance levels required by customers and society, and meet their
expectations, as highly public financial institutions that are expected to be reliable. Based on the above points, the FSA inspected regional financial institutions with a focus on the following items: (i) ensuring business continuity; (ii) thorough management of information security; (iii) establishment of systems for people with disabilities; (iv) enhancement of the system for selling risky products; (v) enhancing the system for processing consultations and complaints from customers; and (vi) preventing abuse of financial functions.

79. Revision of Comprehensive Guidelines for Supervision of Small and Medium Enterprises

These supervisory guidelines were formulated on May 31, 2004, and then have been revised as needed, in order to respond appropriately to environmental changes and new issues. In the program year 2013, they were amended as follows.

80. Revision based on the recommendations of “Summary of discussions in the ‘experts’ meeting on the follow-up to the financial ADR system” (August 2, 2014)

The FSA made a revision to reflect the recommendations of “Summary of discussions in the ‘experts’ meeting on the follow-up to the financial ADR system” published on March 8, 2013 (establishment maintenance of framework for the contribution to the improvement of convenience for users in each financial institution) (applicable from August 2, 2013).

81. Revision pursuant to the amendment to administrative notice on the capital adequacy rules under domestic standards (November 22, 2013)

In response to the introduction of the new capital adequacy requirements (new domestic standards) that have been gradually applied from the end-March 2014 (promulgated March 8, 2013), the FSA made a revision to the supervisory guidelines and policies in consideration of the appropriateness and accuracy of equity capital (applicable from March 31, 2014).

82. Revision that reflects the application of the “Guidelines for Personal Guarantee Provided by Business Owners” (January 31, 2014)

In light of promoting active use of the guidelines by financial institutions and to familiarize and popularize them as lending practices, the FSA made a revision specifying the points for the establishment of a framework pursuant to the guidelines (applicable from February 1, 2014).

83. Revision pursuant to the amendment to administrative notice on the capital adequacy rules under domestic standards (third pillar) (February 18, 2014)
In response to the introduction of the new capital adequacy requirements (new domestic standards) that have been gradually applied from the end-March 2013 (promulgated March 8, 2013), the FSA made a revision on disclosure related to capital adequacy ratio (applicable from March 31, 2014).

84. Revision that reflects the review of restriction on holding of voting rights by a bank (so-called 5% rule) (March 31, 2014)

The Banking Act was revised to accommodate the Amended FIEA 2013. As a result, a revision was made so as to allow banks to flexibly provide capital. Accordingly, the FSA made a revision specifying the points for risk management to the supervisory guidelines and policies (applicable from April 1, 2014).

85. Revision that reflects the introduction of fit and proper requirements for auditors of banks (March 31, 2014)

The Banking Act was revised to accommodate the Amended FIEA 2013, with the introduction of fit and proper requirements for auditors and the audit committee members of banks. Accordingly, the FSA made a revision to the supervisory guidelines (applicable from April 1, 2014).

86. Revision that reflects the review of regulation on scope of a bank’s subsidiary company concerning overseas M&As (March 31, 2014)

The Banking Act was revised to accommodate the Amended FIEA 2013. As a result, in the case of overseas M&As by banks, banks are allowed to hold the acquired foreign financial institution’s subsidiary companies that do not fall on an eligible subsidiary company for a certain period. Accordingly, the FSA made a revision to the supervisory guidelines (applicable from April 1, 2014).

87. Revision related to the response against anti-social forces (June 4, 2014)

Based on the “Encouraging the Efforts to Sever Relationships with Antisocial Groups” published by the FSA in December 2013, the FSA made a revision aimed at promoting efforts to sever relationships with antisocial groups (applicable from June 4, 2014).

88. Revision regarding the introduction of outside directors in listed banks (June 4 2014)

The FSA made a revision on two points in the case of listed banks: (i) at least one independent outside director is required; and (ii) a bank holding company specified as a global systemically important financial institution (G-SIFI) is urged to place a committee or to ensure the selection of independent outside director(s) for a regional financial institution owned by the above
holding companies, even if it is a non-listed company (applicable from June 4, 2014).
### c. Developments regarding Supervision of Insurance Companies

89. Measures taken based on the Annual Supervisory Policy for Insurance Companies, etc. for Program Year 2013

In the program year 2013, the FSA supervised insurance companies focusing on the following priority areas: (i) appropriate fulfillment of guarantee and compensation functions; (ii) promoting sophisticated risk management; and (iii) improvement of customer protection and convenience for users.

### 90. Expected roles of insurance companies and basic concepts on supervision of financial institutions

To have “Better Regulation” become further embedded and deepened, the FSA took the following approaches: (i) financial supervision and administration with a high risk sensitivity; (ii) financial administration from a citizen’s and user’s point of view; (iii) supervisory response with a forward-looking perspective; and (iv) supervisory response which contributes to financial institutions’ improvement of their management and better business judgments.

### 91. Appropriate fulfillment of guarantee and compensation functions

Insurance companies play a key role in people’s lives and economic activities by providing insurance coverage against various risks, and thus they are expected to maintain financial soundness and operate their businesses appropriately.

The FSA placed importance on confirming whether an insurance company has an appropriate management system for insurance payment (including (i) insurance payment management system; (ii) claims guidance system; and (iii) initiatives from an insurance policyholders' perspective). In addition, depending on the business scale, the FSA gave detailed actions based on each attribute of insurance companies for (i) insurance groups; (ii) small and medium-sized insurance companies; (iii) foreign insurance companies; (iv) low-cost, short term insurance providers; and (v) approved specified insurance providers.

### 92. Improvement of customer protection and convenience for users

Improving customer protection and increasing convenience for users in financial institutions not only contribute to developing a sound national economy, but also help to stabilize the Japanese financial system by enhancing citizens' trust in financial institutions. Insurance companies, in particular, are expected to function as providers of extensive protection and compensation to prepare against unexpected situations for their customers, and upon an event that requires an insurance claim, they are expected to fulfill their function.
promptly and without fail. Therefore, it is important for each insurance company’s management to fully provide their leadership, establish a solid organizational structure for their operations, strictly control customer information, and thoroughly protect customers in the process of solicitation and in making insurance payments.

In particular, nominal compliance with laws for customer protection is insufficient; insurance companies should fully understand the effects and purposes of specific laws, identify the compliance levels required by customers and society, and meet their expectations as highly public financial institutions that are expected to be reliable. Insurance companies should also recognize that complaints and requests for consultations from customers may provide them with opportunities to discover potential customer needs, and should respond to them appropriately and actively.

Based on the above points, the FSA inspected insurance companies with a focus on: (i) ensuring business continuity; (ii) thorough management of information security; (iii) development of proper management systems for selling insurance products (the confirmation of the insurance solicitation process and internal systems to manage and supervise insurance solicitors, over-the-counter sales at bank, insurance solicitation system that includes a careful approach to the aging customers, given the growing diversification of insurance product distribution channels and the expansion of insurance agents); (iv) enhancing systems for processing consultations and complaints from customers; (v) accelerating and ensuring effectiveness of product examinations; and (vi) preventing abuse of insurance.

93. Revision of Comprehensive Guidelines for Supervision of Insurance Companies

These guidelines for supervision were formulated on August 12, 2005, and have been revised as needed, in order to respond appropriately to environmental changes and new issues. In the program year 2013, the following revisions were made (94~99 $ ^{14} $ ).

94. Revision based on the recommendations of “Summary of discussions in the ‘experts’ meeting on the follow-up to the financial ADR system” (August 2, 2013)

The FSA made a revision to reflect the recommendations of “Summary of discussions in the ‘experts’ meeting on the follow-up to the financial ADR system” published on March 8, 2013 (establishment of framework for the
contribution to the improvement of convenience for users in each financial institution) (applicable from August 2, 2013).

95. Revision due to reviews of the provisions for an enterprise risk management system and insurance solicitation system (February 28, 2014)

The FSA made the revision to incorporate the provision regarding enterprise risk management that reflects the revised Insurance Core Principles (ICPs) adopted by the International Association of Insurance Supervisors (IAIS) and to add points requiring attention regarding soliciting insurance to the aging customers (effective from February 28, 2014).

96. Revision to clarify the requirements for the employees of insurance agencies (March 18, 2014)

Based on the Report by the “Working Group on the Provision of Insurance Products/Services” of the Financial System Council, the FSA made the revision to clarify the requirements for the employees of insurance agencies before the review of the rules on soliciting insurance and sales (effective from March 18, 2014).

97. Revision that reflects the review of restriction on holding of voting rights by a bank (so-called 5% rule) (March 31, 2014)

The Banking Act was revised to accommodate the Amended FIEA 2013. As a result, a revision was made so as to allow banks to flexibly provide capital. Accordingly, the FSA made a revision specifying the points for risk management to the supervisory guidelines and policies (applicable from April 1, 2014).

98. Revision that reflects the introduction of fit and proper requirements for auditors of banks (March 31, 2014)

The Banking Act was revised to accommodate the Amended FIEA 2013, with the introduction of fit and proper requirements for auditors and the audit committee members of banks. Accordingly, the FSA made a revision to the supervisory guidelines (applicable from April 1, 2014).

99. Revision related to the response against antisocial groups (June 4, 2014)

Based on the “Encouraging the Efforts to Sever Relationships with Antisocial Groups” published by the FSA in December 2013, the FSA made a revision aimed at promoting efforts to sever relationships with antisocial groups (applicable from June 4, 2014).
d. Developments regarding Supervision of Financial Instruments Business Operators

100. Measures taken based on the Annual Supervisory Policy for Financial Instruments Business Operators, etc. for Program Year 2013

In the program year 2013, the FSA supervised financial instruments business operators based on “Basic Concepts on Future Supervision of Financial Institutions,” with the focus on basic financial supervision for the following three areas: (i) appropriate functioning of market intermediation; (ii) risk management and the stability of the financial system; and (iii) improving customer protection and convenience for users.

101. Environment surrounding financial and capital markets and basic concepts on future supervision of financial institutions

The FSA basically continued efforts to further embed and deepen “Better Regulation,” and placed emphasis on (i) financial supervision and administration with high risk sensitivity; (ii) financial administration from a citizen’s and user’s point of view; (iii) supervisory response with a forward-looking perspective; and (iv) supervisory response which contributes to financial instruments business operators’ improvement of their management and making better business judgments.

102. Appropriate performance of market intermediation functions

Financial instruments business operators play roles in enabling smooth transactions by serving as market intermediaries when investors and fundraisers access the market. These roles are the core roles that financial instruments business operators should play in the market, and financial instruments business operators are expected to assume the professional responsibility, recognizing the public nature of their roles. Financial instruments business operators are thus required to enhance investors' confidence in Japan's financial markets and contribute to the development of the financial market and Japanese economy by conducting highly reliable business operations with adequate user protection taken into account, by performing market intermediary functions adequately, and by making contributions to fair price formation for financial instruments.

The FSA supervised financial instruments business operators with particular attention paid to: (i) developing an internal control system to enable their appropriate performance of market intermediary functions; (ii) encouraging contributions to expanding the risk money supply for economic growth; (iii) establishing appropriate internal systems for Customer Solicitation and Explanation for the introduction of NISAs; (iv) strict management of customer information and corporate information; (v) preventing illegal
securities trading; and (vi) preventing inappropriate activities associated with benchmark interest rates.

### 103. Risk management and stability of the financial system

Earnings of financial instruments business operators have improved recently, led by increasing fees/commissions and fund flows to investment trusts in the active stock market that started in November 2014. However, more attention should continuously be paid to the business environment and the financial market, including financial and economic trends overseas. Under these conditions, it is increasingly important for financial instruments business operators to achieve high quality risk management.

The FSA supervised financial instruments business operators with particular attention paid to: (i) facilitating integrated risk management for entire securities company groups; (ii) preparations for business risk at small and medium-sized securities companies (domestic and foreign), and investment management companies; and (iii) initiatives for monitoring various funds.

### 104. Improvement of customer protection and convenience for users

Improvement of customer protection and convenience for users of financial institutions not only contributes to the development of a sound national economy, but also stabilizes the Japanese financial system by enhancing citizens' trust in financial institutions. Financial instruments business operators are expected to establish robust business operation systems under the management leadership, and ensure the protection of customers' interest and a sense of security and trust. Based on this, financial instruments business operators should accurately reflect customers' needs, endeavor to provide innovative financial products/services to enhance their competitiveness, and contribute to the sound growth of Japan's financial market.

Particularly, compliance regarding customer protection is not enough to be met just by formal observance of laws and regulations. Financial instruments business operators should fully understand the objectives of laws and regulations, and understand customers' requests and meet their expectations in a reliable manner as their functions have a highly public nature.

Considering the above points, the FSA supervised financial instruments business operators with the focus on: (i) sales systems; (ii) complaint and consultation handling system; (iii) business continuity (systems & BCP); (iv) discretionary investment business operators; (v) foreign currency margin transactions; (vi) Type II financial instruments business; (vii) credit rating agencies; and (viii) addressing financial crimes.

In doing so, the FSA respected the self-motivated efforts of each financial
instruments business operator and proceeded with supervision that places importance on incentives. In its supervision of financial instruments business operators, the FSA also paid attention to (i) under what kinds of management policies, what kinds of financial products and services financial instruments business operators are providing to customers with what kinds of profiles; (ii) whether there are warped incentives that may arise because financial instruments business operators are pursuing short-term profits or because they have conflicts of interest; and (iii) whether a system is developed to internally check (including by management) whether management policies are thoroughly implemented in a front office.

Further, in view of recent compliance issues such as the MRI problem, the FSA enhanced its risk-based supervisory approach by strengthening its monitoring system and improvement of information analysis by proper and effective uses of limited human resources.

105. Revision of Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc.

These supervisory guidelines were formulated on September 30, 2007, and have been revised as needed in order to respond appropriately to environmental changes and new issues. In the program year 2013, they were amended as follows.

106. Revision that reflects the status of over-the-counter binary option transactions for individuals (July 3, 2013)

The FSA added material relating to products and customer management in accordance with the revision of the Cabinet Office Ordinance for over-the-counter binary option transactions for individuals. In addition, the FSA also added material on whether to comply with the provisions of the self-regulatory rules as “supervisory viewpoints” (effective from August 1, 2013).

107. Revision based on the recommendations of “Summary of discussions in the ‘experts’ meeting on the follow-up to the financial ADR system” (August 2, 2013)

The FSA made a revision to reflect the recommendations of “Summary of discussions in the ‘experts’ meeting on the follow-up to the financial ADR system” published on March 8, 2013 (establishment maintenance of framework for the contribution to the improvement of convenience for users in each financial institution) (applicable from August 2, 2013).

108. Revision that reflects the handling of slippage in currency-related