Eun-Kyung Kim’s Push for Korea Inclusive Finance Agency and Credit Counseling & Recovery Service Merger: Institutional and Organizational Challenges

Excluded from Government’s Public Institution Restructuring Plans
Internal Disagreements at the Credit Counseling & Recovery Service Must Be Resolved for Integration

Eun-Kyung Kim, President of the Korea Inclusive Finance Agency and Chairperson of the Credit Counseling & Recovery Service, is accelerating discussions on the potential merger of the two organizations. However, as the merger is being pursued independently from the government’s broader public institution restructuring plans and there are disagreements within the Credit Counseling & Recovery Service about both the approach and necessity of integration, substantial coordination will be required for the merger to actually take place.

According to relevant ministries and financial industry sources on August 26, Kim is pushing for the enactment of the “Basic National Financial Security Act” to provide a legal basis for the integration of the Korea Inclusive Finance Agency and the Credit Counseling & Recovery Service. It is reported that the bill is likely to include provisions relevant to this merger.

Kim is said to be exploring several options regarding the legal status of the merged entity. One option under consideration is removing the Korea Inclusive Finance Agency’s designation as a public institution so that the new organization would not be classified as such. Another option is integrating the Credit Counseling & Recovery Service into the public institution system and launching the merged organization as a public institution.

However, it appears that actually merging the two organizations will not be an easy task. The Ministry of Economy and Finance, which is currently working on the restructuring of public institutions, is not reviewing a merger proposal for the Korea Inclusive Finance Agency and the Credit Counseling & Recovery Service. Since the Credit Counseling & Recovery Service is not a public institution, it is considered outside the scope of the restructuring initiative. Reports also indicate that the option to remove the public institution status from the Korea Inclusive Finance Agency is not under consideration.

The internal disagreements within the Credit Counseling & Recovery Service are another major challenge. Employees there are concerned that merging a debt-adjustment agency with a policy-based inclusive finance provider could create conflicts of interest and undermine the independence and neutrality of debt-adjustment work. Recently, around 330 Credit Counseling & Recovery Service employees signed a petition titled “Securing Public Trust in the Appointment Process for the Agency Head and Enacting Special Legislation.” They argue for separating the roles of President of the Korea Inclusive Finance Agency and Chairperson of the Credit Counseling & Recovery Service, with each appointed independently.

Kim cites duplication of work and fragmented support systems between the two organizations as reasons for integration. The Korea Inclusive Finance Agency and the Credit Counseling & Recovery Service already share tasks such as financial counseling and education, and the separation of debt-adjustment and policy-based inclusive finance support by organization makes it difficult for users to receive continuous assistance. In a press briefing last April, Kim stated that about 30% of the two organizations’ work overlaps.

However, there are differing opinions on whether merging the organizations is essential to resolving these issues. Some point out that linking the information systems of the two organizations and improving the counseling and support procedures could reduce overlapping work and gaps in assistance without a full-scale merger.

Sangbong Kim, a professor at Hansung University, pointed out, “The two organizations’ roles are clearly different, so merging them at this stage is excessive.” He explained, “The Korea Inclusive Finance Agency provides preemptive support by supplying funds to people who have difficulty accessing traditional finance, while the Credit Counseling & Recovery Service plays a post-support role by assisting those who already have debts and overdue payments. While it is possible to integrate certain functions of the centers in line with basic financial rights laws and regulations, there is little need to merge the organizations themselves.”

Caution has also been raised within the National Assembly. In a report issued last June, titled “Evaluation of the Operation of Debt-Adjustment Systems Supporting Financially Vulnerable Groups,” the National Assembly Budget Office highlighted that the roles of the Credit Counseling & Recovery Service—mediating between debtors and financial institutions—and the Korea Inclusive Finance Agency—supplying policy-based inclusive finance through guarantees and loans—are fundamentally different. The National Assembly Budget Office stated, “The Financial Services Commission needs to establish an independent system for appointing the heads of the two organizations to prevent conflicts of interest, and implement regular management and supervision regarding their objectives and performance of duties.”

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