Financial Supervisory Service Holds Meeting with Financial Holding Company CEOs
Draws Attention by Reiterating Emphasis on 'Consumer Protection'
On December 10, Lee Chanjin, Governor of the Financial Supervisory Service, stated, "Holding companies should actively fulfill their role as the 'overall manager' of the group by detecting and controlling risks." He reiterated the importance of financial consumer protection and emphasized that financial holding companies must take a proactive approach at the group level. He also said that, if necessary, he would pursue institutional reforms to strengthen the consumer protection role of financial holding companies.
Governor Lee held a 'Financial Holding Company CEO Meeting' at the Korea Federation of Banks in Seoul that afternoon, where he said, "The role of financial holding companies has been passive in cases of repeated consumer damage and major financial accidents," and added, "If necessary, we will review institutional improvement measures to strengthen the active role of financial holding companies."
He pointed out, "There have been persistent criticisms that the role of holding companies in internal control management has been passive, as seen in recent cases of consumer damage such as the misselling of ELS and a series of large-scale financial accidents."
He added, "The chairman of a financial holding company must clearly recognize the company's role in the overall supervision of the group," and continued, "The holding company should promptly identify the vulnerabilities of individual subsidiaries and actively fulfill its 'fundamental duty' to comprehensively manage risks across the group."
Governor Lee also requested the active support of financial holding companies in relation to productive finance. He said, "The loan structure, which has long relied on real estate collateral, can no longer be sustained in a rapidly changing economic environment," and asked, "Please enhance the assessment and evaluation of innovative companies' business potential, leveraging outstanding talent, so that productive finance can be successfully established."
He went on to say, "The supervisory authorities will actively seek ways to alleviate the capital burden on the financial sector within the scope permitted by international standards such as Basel, so that funds can be supplied to productive sectors."
He also called for strengthened social responsibility to build trust in finance, including improving digital accessibility, supporting employment in the financial sector, and providing management consulting for small business owners. He said, "The employment rate of people with disabilities at domestic banks (1.6%) falls far short of the legally required rate for private companies (3.1%)," and emphasized, "The supervisory authorities will also establish a comprehensive evaluation system for inclusive finance, assess the social role of banks, actively communicate the results, and encourage these practices to become part of management culture."
Governor Lee once again stressed consumer protection. He criticized, "Responding to the misselling of financial products by dismissing it as 'isolated incidents at some sales sites' or relying solely on post-loss compensation, as was done in the past, undermines trust in finance and can create existential risks."
He stated, "From now on, at the product design stage, we must carefully examine what types of risks are inherent and which customers a product is not suitable for, and establish much more sophisticated standards for verifying customer understanding and suitability than in the past."
He concluded, "The Financial Supervisory Service will make proactive financial consumer protection the top priority in all ongoing work, and will focus our supervisory and inspection capabilities to the fullest extent."
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