What Are the Key Themes of the FSS Work Report to the National Assembly?... "Consumer Protection, Corporate Governance, and Risk Management"

Emphasis Remains on "Consumer Protection" This Year
Shift From Ex Post Relief to Ex Ante Prevention
Measures to Improve Governance of Financial Holding Companies to Be Announced in March

This year, the key themes of the Financial Supervisory Service's (FSS) work report to the National Assembly can be summarized as "consumer protection, corporate governance, and risk management." The aim is to achieve both financial consumer protection and financial market stability, while at the same time stepping up efforts to improve corporate governance in the financial sector. In particular, the FSS will maintain its consumer protection stance this year as it did last year, and on the 9th it plans to announce detailed tasks that will apply this approach from the financial product design and manufacturing stages.

Emphasis Remains on "Consumer Protection" This Year... Detailed Tasks for Application to Financial Products to Be Announced on the 9th

According to the office of People Power Party lawmaker Kim Sanghoon on the 4th, the FSS submitted a "work status" report containing these points to the National Assembly's National Policy Committee. The report sets out the supervisory directions and key policy tasks that the FSS will focus on this year.

The FSS plans to continue this year with the policy of strengthening financial consumer protection that has been in place since last year. Through the "roadmap for improving financial consumer protection" announced in December last year, the FSS stated that it would shift the financial consumer protection paradigm from the previous focus on "ex post relief for a small number of victims" to a focus on "ex ante preventive consumer protection." This roadmap focuses on building a supervisory framework that adopts consumer protection as the core standard throughout the entire life cycle of financial products, from the design and manufacturing stage to sales and post-management.

The FSS is currently preparing detailed tasks to reflect this policy direction in actual supervision and inspections, and plans to finalize and officially announce the contents on the 9th. The plan is understood to include measures to block risks in advance by incorporating consumer protection principles from the financial product design and manufacturing stages. Whereas previously the rule was only to sell "high-risk financial investment products" that carry the possibility of principal loss of more than 20% and up to 100% to customers who can bear such risks, the intention now is to apply these principles to a broader range of financial products.

In addition, the FSS announced that it will focus on improving supervisory administrative work processes and enhancing supervisory competitiveness, establishing a risk-based consumer protection supervisory framework, strengthening monitoring of potential risk factors such as delinquency rates, and reinforcing responses to financial crimes that directly affect people's livelihoods.

Yonhap News Agency

Overhauling Corporate Governance in the Financial Sector... Parallel Management of Hacking Risks

Improving corporate governance in the financial sector is also a key task for the FSS this year. To enhance the fairness and transparency of corporate governance in the financial sector, the FSS is operating a "corporate governance advancement task force (TF)" jointly with the Financial Services Commission. Last month, it conducted a special inspection of corporate governance at the eight major financial holding companies: KB, Shinhan, Hana, Woori, NH, BNK, iM, and JB.

Based on the results of this inspection, the FSS plans to analyze the problems identified in areas such as chief executive officer (CEO) appointment procedures, board composition and operation, and performance-based compensation systems, and to finalize and announce measures to improve the corporate governance of financial companies by the end of March. Within and outside the financial sector, it is expected that the key issues will include whether to strengthen shareholder control when a CEO seeks another term, and whether to reinforce the roles of outside directors and the accountability of management.

At the same time, the FSS will also strengthen responses to IT risks such as hacking incidents. It plans to support the faithful implementation of the "pan-government comprehensive information security measures" and to establish a preventive supervisory framework for IT risks. Following last year's push to amend the Electronic Financial Transactions Act, the FSS also intends to support the enactment of the "Digital Finance Safety Act."

In addition, the FSS will actively support the activation of productive finance, which the government has emphasized. It plans to promote the establishment of new infrastructure and improvements to systems so that venture capital funds from the financial investment industry can be smoothly supplied to innovative companies and growth industries.

Managing distressed real estate project financing (PF) was also cited as a major task. The FSS plans to focus on managing large real estate development projects that have fallen into distress due to funding difficulties, and to promptly sort out projects that are difficult to revive through asset sales or liquidation. To this end, it will transfer non-performing PF loans to restructuring funds and, by making information on project sites public, will pursue asset sales and normalization in parallel. In addition, through market-led project normalization measures such as forming syndicated loans, it plans to ensure that funds are supplied without disruption to new and sound project sites. A syndicated loan refers to a method in which multiple financial institutions share the risks and jointly provide funds.

This content was produced with the assistance of AI translation services.