A Completely Changed Financial Supervisory Service, Emphasizing Consumer Protection and Digital Innovation

Major Reorganization of FSC Structure into 13 Departments and 40 Teams
Yoon Seok-heon, FSC Chairman, "Strengthening Functional Supervision of High-Risk Financial Products"
Subtech Innovation Team Newly Established... Total Departments Increased from 61 to 62
Expanded P2P Inspection Integrated Organization to Boost Innovative Finance Projects

[Asia Economy Reporter Kangwook Cho] On the 23rd, the Financial Supervisory Service (FSS) carried out an organizational restructuring by significantly expanding the Financial Consumer Protection Division (FCPD) and establishing a new organization to support digital transformation and innovation in financial supervision. Accordingly, the FCPD will be greatly expanded from the current 6 departments and 26 teams to 13 departments and 40 teams. Additionally, a 'SupTech Innovation Team' will be newly established to build an efficient financial supervision system utilizing IT technology. As a result, the entire FSS organization will be reorganized from the current 61 departments (37 bureaus and 24 offices) to 62 departments (40 bureaus and 22 offices).

FSS Governor Seokheon Yoon stated at a briefing on the day, "This organizational restructuring plan was prepared to respond to the recent trend of strengthening financial consumer protection, including the legislative promotion of the Financial Consumer Protection Act (FCPA), and to strengthen function-specific supervision of high-risk financial products designed, solicited, and sold across various financial sectors."

According to this restructuring plan, the financial consumer protection sector under the current head of the FCPD (vice president) will be expanded and reorganized into two major pillars: consumer damage prevention (preemptive) and rights protection (post-event). Each sector will be exclusively managed by its respective vice president to establish a responsible management system. The FCPD organization will increase from the current 6 departments to 13 departments, adding 7 new ones, and the number of teams will increase from 26 to 40, adding 14 teams, based on the financial consumer protection sector. The insurance supervision and inspection sector, which was previously organized within the FCPD, will be moved to the general management and business sector to focus on supervising the soundness of financial companies.

Specifically, to strengthen preemptive damage prevention, the consumer damage prevention sector will be assigned 7 departments and 19 teams, including the ▲Financial Consumer Protection Supervision Bureau ▲Financial Product Sales Supervision Bureau ▲Financial Product Review Bureau ▲Financial Product Analysis Office ▲Pension Supervision Office ▲Financial Education Bureau ▲Inclusive Finance Office. These departments will be responsible for preemptive supervisory functions related to financial product sales, such as reviewing financial product terms and conditions, solicitation and sales under the FCPA and individual financial laws, financial product advertising and disclosure, and improving systems related to unfair trade practices. They will also be granted consultation authority on the establishment and revision of detailed rules for consumer protection in various sectors.

Furthermore, the plan strengthens continuous supervision functions by monitoring each stage of financial product design, solicitation, and sales, utilizing complaint databases (DB), and transferring mystery shopping tasks. For financial products with a high risk of consumer damage, consumer alerts will be activated, and timely responses to new operational demands arising from the future enforcement of the FCPA will be ensured. Pension supervision and inclusive finance support functions will also be transferred to the FCPD to support the enhancement of consumers' economic self-reliance.

To strengthen post-event rights protection, the consumer rights protection sector will be assigned 6 departments and 21 teams, including the ▲Dispute Mediation Bureau 1 ▲Dispute Mediation Bureau 2 ▲Rapid Complaint Handling Center ▲Complaint and Dispute Investigation Office ▲Illegal Finance Response Team ▲Insurance Fraud Response Team. To improve consumer satisfaction, a 'Rapid Complaint Handling Center' has been newly established to strengthen one-stop complaint processing functions. In particular, an on-site investigation function for major complaints and disputes spanning multiple sectors, such as Derivative Linked Funds (DLF), will be newly established, and joint inspections with sector-specific inspection departments can be conducted when necessary. Consultation authority on sanction cases causing significant consumer damage will also be granted. Additionally, active responses will be made to infringements of financial consumers' rights caused by illegal private loans, voice phishing, insurance fraud, and other issues.

The digital transformation of financial supervision and support functions for innovative finance will also be strengthened. The Information Strategy Office, the department in charge of digital transformation in financial supervision, will be expanded to the Information Strategy Bureau, becoming the overall department for financial supervision information systems. Within the Information Strategy Bureau, a SupTech Innovation Team will be newly established to support the transition to an IT-based supervision and inspection system. The IT and Fintech Strategy Bureau, which oversees IT supervision and inspection of financial companies, will be assigned a 'RegTech' support function that utilizes information and communication technology to streamline regulatory compliance tasks such as legal compliance, compliance monitoring, and internal control. The P2P Finance Business Act, which will be enforced on August 27, as well as the support functions for innovative financial businesses, will be strengthened by expanding and reorganizing the integrated P2P supervision and inspection organization.

In addition, to enhance consistency and efficiency in international affairs, the International Cooperation Bureau and the Financial Hub Support Center have been integrated into the International Bureau (Financial Hub Support Center). A dedicated organization called the 'New Southern Policy Expansion Support Team' has also been newly established to support the entry of domestic financial companies into the New Southern region.

Governor Yoon explained, "The purpose of this organizational restructuring is largely focused on two aspects: strengthening the functions and roles of the Financial Consumer Protection Division and enhancing the digital transformation of financial supervision and support functions for innovative finance. Despite the expansion and reorganization of the FCPD with the establishment of 5 new departments and the transfer of 2 departments, the overall organization has been kept to the minimum level of adding only one new department."