South Korea's Financial Supervisory Service said it has succeeded over the past year in establishing financial consumer protection as a core mission within both the regulator and financial firms, one year after declaring an overhaul of its supervisory framework around consumer protection. The FSS plans to embed a consumer protection culture by writing into law a preventive supervisory framework covering the entire life cycle of financial products.
FSS Governor Lee Chan-jin said in opening remarks at the Public Report Session on Financial Consumer Protection Results, held on the 17th at the agency's headquarters in Yeouido, Seoul, that "unlike advanced consumer protection regimes, which cover consumers across the entire product life cycle, Korea's Financial Consumer Protection Act regulates mainly at the point of sale." He added, "We have put arrangements in place in the short term through guidelines and other means, but this must be supplemented through legislation so that the consumer protection legal framework is complete."
The event was arranged to review results since the FSS declared a sweeping organizational shift toward preemptive financial consumer protection in September last year. Lee Se-hoon, senior deputy governor of the FSS, said at a pre-event briefing that "over the past year we have spread the DNA of financial consumer protection within the supervisory authority and built a system that puts consumer protection first," while adding that "the shift to a consumer-centered management paradigm has only just cleared the first stage."
The session also drew a series of expert recommendations aimed at strengthening consumer protection work across the financial industry. Yoon Ji-young, a Seoul Economic Daily reporter who took part as a panelist, said, "Branches are directly tied to expanding access to financial services, but they are not easy for financial firms to maintain," adding that "the decline in branches is emerging as a social problem, and the financial authorities need alternatives."
In response, Kim Sung-wook, deputy governor for banking and non-bank financial supervision at the FSS, said, "Joint procedures for branch closures took effect in March this year, and we will analyze how they have been implemented through the end of this month and improve what needs improving." He added, "As for post office banking agency services, an alternative channel, the offerings currently center on loan products, and we will monitor operating results and discuss with related authorities whether to expand them." Governor Lee also said, "We will look for ways to ensure that in-person branches retain at least a minimum level of function."
The FSS also laid out further tasks, including expanding a platform to counter financial crimes affecting household finances, strengthening digital supervisory capabilities, overhauling systems for financial complaints and disputes, managing capital market volatility, and improving transparency in supervisory administration. In the banking sector, it said it would improve fee structures for trust products including exchange-traded funds, while in the financial investment sector it would address the recommendation of high-risk investments to minors and unreasonable interest rate and fee structures.
At a separate meeting on financial conditions the same day, Governor Lee stressed the need to respond preemptively to potential risks in individual sectors, including the financial burden on companies and households from U.S. Federal Reserve rate increases and the soundness of financial companies. "There are concerns that volatility in the domestic stock market could widen as trading volume is dispersed by the recent extension of trading hours," Lee said. "Volatility could widen further due to foreign capital outflows following rate increases and the possibility of a slowdown in artificial intelligence investment, so continue to monitor retail investors' concentration in high-risk products and trends in margin trading."
