The Financial Supervisory Service will be given joint investigative authority over prepaid funeral service companies.
A revised Installment Transactions Act that passed the National Assembly's plenary session on the 20th includes a provision granting the FSS investigative powers over the prepaid funeral service industry, according to financial industry sources on the 26th. If a funeral service company violates rules on credit extension — such as lending more than 50% of its capital to major shareholders or related parties — the FSS will be able to launch an investigation at the request of the Fair Trade Commission.
It is the first time financial authorities have held investigative powers over the industry. Because prepaid funeral companies raise funds and borrow money in ways that resemble financial activity, critics have long argued that oversight belongs with the FSS, which has expertise in financial supervision. "The FSS's authority to investigate the prepaid funeral industry is limited to rules on credit extension," an FTC official said. "Combining the FTC's expertise in investigating market conduct with financial supervisory capabilities will make effective enforcement possible."
The FSS plans to reorganize relevant units to coincide with the revised law taking effect. It has not yet decided which division — small and medium-sized finance, or household finance — will handle the industry. "Discussions must first settle how much authority and what functions will be granted for investigating the prepaid funeral industry," an FSS official said. "It has not been determined whether we will add staff to an existing team or create a separate one."
Still, there are signs of unease over a widening supervisory workload at a time when headcount has stagnated. The FSS created a supervision and inspection team for peer-to-peer lending ahead of the 2020 enforcement of the Act on Online Investment-Linked Financial Business and Protection of Users, and set up a dedicated virtual asset unit in 2023. This year it added 10 staff dedicated to community credit cooperatives, which had been flagged as a supervisory blind spot, and at last year's parliamentary audit of government agencies, lawmakers argued that the FSS should also oversee consumer cooperatives that borrow money and collect reserve funds. If calls to expand the scope of supervision continue beyond the funeral service industry, the FSS is expected to push for more staff and a larger organization.
