FSA Reform: Agency Must Create Environment for Asset Building

Editorial

14:59 JST, September 9, 2025

The Japanese economy has entered a new phase in which growth is pursued by returning the benefits of corporate and stock market development to households.

The Financial Services Agency should strengthen its support in order to foster a society in which people can build assets with peace of mind.

The FSA has unveiled a plan for organizational reform, including the establishment of a new bureau for asset management and supervising the insurance industry. The plan is scheduled to be implemented next summer. The aim of the reform is to bolster individual asset building and corporate growth while strengthening oversight of the insurance industry, which has seen a series of scandals.

The current Supervision Bureau will be renamed the “banking and securities supervision bureau.” This marks the first major organizational reform since 2018.

The Japanese economy is in the process of exiting the “lost 30 years” in which prices and wages did not increase, while a “world with interest rates” has arrived. It is crucial to redirect household financial assets, which are heavily skewed toward savings, to the stock market to support asset building.

In January 2024, the Nippon Individual Savings Account (NISA) investment program was significantly expanded, and combined with recent stock market gains, the investor base is expanding. The specifics of the FSA’s organizational reform are appropriate.

Life insurance companies and non-life insurance companies also play a crucial role in advancing this reform. They wield significant influence in the stock market through their management of massive funds and are key entities to assist individuals in building their assets.

However, the insurance industry has seen a series of scandals in recent years. Cartels involving corporate insurance premiums and large-scale data leaks have severely damaged consumers’ trust in the industry.

The FSA must rigorously enforce investor protection and strictly monitor the insurance industry’s compliance system.

The agency was established in 2000 after its predecessor was separated from the then Finance Ministry before the reorganization of ministries and agencies, and the issues it faces have evolved with the times. Initially, amid severe instability in the nation’s financial system, the agency implemented strict inspection regimes to resolve the problem of nonperforming loans in the banking industry.

Later, during the 2000s, the agency issued many administrative punishments, causing it to be dubbed the “financial punishment agency,” and drew criticism that it was undermining the autonomy of financial institutions’ management.

The financial system is the infrastructure of the economy. The FSA must always accurately grasp the needs of the times and respond flexibly.

Today, the diversification of financial services is advancing, and regulation in the age of the internet is a major issue.

It has been shocking to see the rapid increase in incidents in which online securities accounts are hacked by unknown parties and stocks are traded without authorization.

Traditional supervision methods, which are reliant on people, are not always effective regarding fintech, where finance and technology converge. Utilizing new technologies such as artificial intelligence will also be necessary.

(From The Yomiuri Shimbun, Sept. 9, 2025)