[Exclusive] 'Fintech Also Must Notify Service Reduction 6 Months in Advance' Halted by Financial Services Act

Office for Government Policy Coordination Regulatory Reform Committee Recommends Withdrawal of FSC Amendment to Financial Consumer Protection Act

[Asia Economy Reporter Bu Aeri] The Financial Services Commission's proposed amendment to the Enforcement Decree of the Financial Consumer Protection Act has been halted.

According to the Regulatory Reform Committee (RRC) under the Office for Government Policy Coordination on the 21st, the RRC classified the Enforcement Decree of the Financial Consumer Protection Act as an "important regulation" and decided to recommend its withdrawal at a meeting held on the 14th. When classified as an important regulation by the RRC, a plenary session involving all stakeholders is held to reconsider the introduction of the regulation, and then the results are notified to the relevant ministry before proceeding with the legislative amendment process.

Earlier in August, the Financial Services Commission had announced the legislative notice for the Enforcement Decree of the Financial Consumer Protection Act, which requires prepaid and debit payment instruments (including electronic payment instruments) to have an obligation to explain linked and affiliated services and to notify six months in advance when reducing or changing linked services.

Currently, prepaid and debit cards are not considered financial products under the Financial Consumer Protection Act, unlike credit cards, so these regulations did not apply. If the Enforcement Decree is applied, fintech companies will be required to notify six months in advance and have an obligation to explain when reducing or changing linked services, similar to credit card operators.

Because of this, the fintech and simple payment service industries have opposed being subjected to the same regulations as credit cards that charge annual fees, calling it unreasonable. The Korea Fintech Industry Association and the Korea Internet Corporations Association have submitted opinions to the financial authorities stating this unfairness.

Prepaid payment and simple payment services do not charge annual fees, unlike credit cards. For example, benefits such as "using 00Pay provides a discount coupon for Baedal Minjok" are a type of marketing promotion fully borne by fintech companies. However, if the Enforcement Decree proposed by the Financial Services Commission passes, holding such events will become practically impossible, ultimately reducing consumer benefits, according to the industry's claim. A fintech industry official said, "It's like being told to notify six months in advance about a 1+1 event held at E-Mart."

The RRC supported these industry claims. The RRC stated, "Due to the differentiation from credit cards and regulatory operational uncertainties, the regulatory burden on the field is considerable," and recommended withdrawal.

A member of the RRC said, "Competition among big tech companies has a positive aspect of increasing consumer benefits, and rather than forcibly including prepaid and debit payment instruments as financial products, it is necessary to find other alternatives."

However, the RRC added that since the need to prevent consumer damage caused by insufficient explanations and unilateral service reductions or changes is recognized, alternatives to supplement this should be prepared.