FSS Dispute Resolution Applications: 6 Out of 10 Cases 'Dismissed or Rejected'

Increase in 'Dismissal and Rejection' Rates Despite Board of Audit Criticism
Assemblyman Lee Jung-moon Questions Effectiveness of Financial Dispute Mediation System

The Financial Supervisory Service (FSS) operates the ‘Financial Dispute Mediation Committee (FDM Committee)’ to mediate financial disputes arising between financial companies and financial consumers. However, it has been revealed that 6 out of 10 dispute mediation cases requested by financial consumers fail to even initiate the procedure and are terminated.

According to data received by Lee Jeong-moon, a member of the National Assembly’s Political Affairs Committee from the Democratic Party of Korea, from the FSS on the 12th, out of a total of 32,130 financial dispute mediation applications received by the FSS in 2023, 21,231 cases, accounting for 59.6%, were dismissed or rejected by the responsible department without being referred to the FDM Committee.

When a financial dispute mediation application is received, the FSS conducts fact-finding investigations and recommends agreements between the parties or decides whether to refer the case to the FDM Committee. In this process, cases that have already been filed in court or where a lawsuit was filed after the mediation application, cases where it is judged that there is no practical benefit in recommending an agreement or proceeding with mediation based on relevant laws or objective evidence, or cases recognized as unsuitable for dispute mediation may be handled directly by the FSS without referral to the FDM Committee.

Regarding this, the Board of Audit and Inspection pointed out in 2020 that “the FSS expands the scope of exceptions stipulated in the relevant laws by allowing cases where ‘the parties’ claims differ or it is difficult to adopt evidence to establish facts’ to be handled directly by the responsible department through dismissal without referral to the FDM Committee.”

Despite the Board of Audit and Inspection’s criticism, the proportion of financial dispute mediation applications dismissed or rejected by the FSS has steadily increased from 40.7% in 2020 to 47.7% in 2021, 52.6% in 2022, and 59.7% in 2023. This represents an increase of 18.9 percentage points over four years since the 2020 audit.

Assemblyman Lee said, “Due to the nature of financial disputes, it is often difficult to verify facts based solely on application documents, so mediation procedures that allow for more thorough investigation and verification are frequently necessary.” However, he criticized, “A significant number of complaints are dismissed or rejected solely based on the judgment of the FSS’s responsible department, which undermines the effectiveness and credibility of the financial dispute mediation system.”

He added, “Since the FSS, which holds financial supervisory authority, also handles financial dispute mediation tasks, concerns about fairness are continuously raised. Based on overseas cases, it is urgent to separate the financial dispute mediation body to secure independence and fairness, while simultaneously improving the system to enhance financial consumers’ trust.”