TAIWAN Law and Practice Contributed by: Robin Chang, Sarah Wu and Eddie Hsiung, Lee & Li
4. Online Lenders 4.1 Differences in the Business or Regulation of Fiat Currency Loans Provided to Different Entities
etc as principles. A robo-adviser service provider shall not be involved in any situation that may potentially result in a conflict of interest against its customers in respect of the portfolio-planning process. For example, when the objectivity of a robo-adviser’s suggestion is affected by any compensation or interest that such robo-adviser service provider receives from a product sup - plier, then such robo-adviser service provider shall ensure that its robo-adviser system is capable of performing the following functions fairly and objectively: (i) determining parameters for the investment portfolios such as investment return, dispersion, credit risk and liquidity risk; (ii) establishing criteria for selection of securi - ties in investment portfolios such as transaction cost, liquidity risk, credit risk, etc; (iii) selecting appropriate securities in investment portfolios; if such securities are selected by algorithms, those algorithms shall be reviewed and audited as well; and (iv) examining whether the default invest - ment portfolio recommendations are appropri - ate for the risk tolerance of the corresponding customers. The Robo-Adviser Rules also put in place cer - tain rules for the implementation of “rebalancing transactions” by robo-advisers as indicated in 2.2 Regulatory Regime . Given the above, so long as the above-men - tioned rules are followed, there should be no issue relating to best execution from the per - spective of the Robo-Adviser Rules.
A local licensed bank may engage in lending business. However, conducting lending activities as a company’s registered business item is still not permitted in Taiwan currently, although lend - ing does not fall within the type of business that may only be carried out by a local licensed bank. Under Taiwan law, a bank’s lending to small busi - nesses or individuals may be subject to stricter rules from the perspective of financial consumer protection. 4.2 Underwriting Processes As indicated in 4.1 Differences in the Business or Regulation of Fiat Currency Loans Provided to Different Entities , if a fintech company is not a licensed bank, then it may not register lending as one of its registered business items. In the case of peer-to-peer lending, as indicat - ed in 2.2 Regulatory Regime , pursuant to the P2P Guidelines, a peer-to-peer lending platform operator would need to have in place and imple - ment relevant risk control mechanisms such as establishing criteria for reviewing loan applica - tions and limits on loan amounts. 4.3 Sources of Funds for Fiat Currency Loans For bank loans, the funds are acquired through conventional means, similar to other traditional lending practices. In peer-to-peer lending, the funds originate from lenders who are connected through the platform.
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