pc
nid 93466
Jun 24, 2026
rghosh@vixio.com
Japan
Financial Services Agency
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1788 charsJapan's Financial Services Agency Publishes Public Comment Results on Financial Function Strengthening Law Amendments
On June 24, 2026, Japan's Financial Services Agency (FSA) published the results of a public consultation on draft cabinet orders and ministerial ordinances related to amendments to the Financial Function Strengthening Law (金融機能強化法). The FSA conducted the consultation period from May 22, 2026 to June 5, 2026, during which it received 27 comments from five individuals and organisations.
The amendments implement changes to regulations governing financial institutions' enhanced functions and capabilities. The FSA's responses to public comments address key issues raised during the consultation period. The amendments introduce modifications across multiple regulatory instruments, including cabinet orders, ministerial ordinances, and supervisory guidelines applicable to small and regional financial institutions, cooperative financial institutions, labour banks, and agricultural financial cooperatives.
Notably, the FSA repealed the "Guidelines on the Financial Function Strengthening Law" (金融機能強化法ガイドライン), with equivalent content incorporated into revised comprehensive supervisory guidelines for small and regional financial institutions. One notice was classified as a minor amendment under the Administrative Procedure Law and therefore did not require a separate public comment process.
The cabinet order received cabinet approval on June 19, 2026, and was published on June 24, 2026. All related ordinances and notices were published on June 24, 2026. The cabinet order, ministerial ordinances, notices, and supervisory guidelines amendments take effect on June 25, 2026. The amendments apply to deposit-taking financial institutions, cooperative financial institutions, and other entities subject to FSA supervision under the Financial Function Strengthening Law framework.
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2099 charsJapan's Financial Services Agency Publishes Consultation Response to Financial Function Strengthening Law Amendments
On June 24, 2026, Japan's Financial Services Agency (FSA) published the results of a public consultation on draft cabinet orders and ministerial ordinances related to amendments to the Financial Function Strengthening Law. Key features of the response include :
The cabinet order was approved by cabinet decision on June 19, 2026, published on June 24, 2026, and takes effect on June 25, 2026.
Amendments to the capital participation framework introduce independence requirements for outside auditors at cooperative financial institutions, requiring that outside auditors are not major business counterparties of the institution or their officers or employees, and that institutional plans include provision for at least two outside auditors of whom at least one must be independent.
Amendments to the fund disbursement framework set a four-month post-integration window for applications, define eligible joint systems as those shared by three or more financial institutions or groups, and designate eligible recipients as regional banks with deposits below JPY 5 trillion and cooperative financial institutions.
Four categories of eligible activities are specified for fund disbursement: construction of new joint systems; new membership in existing joint systems; consolidation of existing joint systems; and renewal of existing cooperative financial institution joint systems by central institutions. Penalties arising from the cancellation of existing system contracts are included as eligible expenses.
The maximum membership of the Financial Function Strengthening Review Board is increased from six to seven members, and the total disbursement ceiling is raised to JPY 200 billion.
This publication directly follows the FSA's May 22, 2026 consultation , which proposed amendments covering auditor independence requirements at cooperative financial institutions, fund disbursement arrangements for joint IT system consolidation, and increases to the Financial Function Strengthening Review Board membership cap and total disbursement ceiling. The amendments take effect on June 25, 2026.