FSS Announces Organizational Restructuring and Consumer Protection Improvement Roadmap
Establishment of the 'Consumer Protection Headquarters' Under the Governor
Shifting Consumer Protection from Post-Remedy to Prevention
Pushing for Special Judi
The Financial Supervisory Service (FSS) will establish a new "Consumer Protection Division" directly under the Governor to strengthen its financial consumer protection function. The organization will shift from a focus on post-incident remedies for a small number of victims to enhancing preventive consumer protection for the broader public. The FSS is also moving forward with plans to introduce special judicial police (SJP) to crack down on financial crimes affecting people's livelihoods, such as voice phishing.
Establishment of the "Consumer Protection Division" Under the Governor
On December 22, the FSS announced an organizational restructuring plan, stating that it will establish the Consumer Protection Division directly under the Governor to build a supervisory service system centered on preventive consumer protection.
The Consumer Protection Division was created by separating the consumer protection function from the existing Financial Consumer Protection Bureau and granting it overall supervisory authority. With the expansion of the organization and its placement directly under the Governor, the FSS explained that it can now utilize all available resources for proactive consumer protection.
This restructuring comes in response to criticism that the Financial Consumer Protection Bureau, the FSS's internal consumer protection body, operated as a separate division and lacked organic cooperation with other departments. In particular, the Bureau had been focused on post-incident responses, such as dispute mediation and financial incident inspections, rather than on proactive prevention, which limited its effectiveness in consumer protection.
Under the Consumer Protection Division, the Consumer Protection Supervision Bureau, Consumer Damage Prevention Bureau, and Supervisory Innovation Bureau will be established. The Consumer Protection Supervision Bureau will handle consumer protection, response to financial harm affecting everyday life, regulatory matters, and improvements to industry practices. The Consumer Damage Prevention Bureau will oversee and manage enhanced preventive measures, including strengthening supervision at the product manufacturing, design, and review stages to ensure financial product risks are considered from the consumer's perspective. The Supervisory Innovation Bureau will be responsible for supervising the governance of financial companies, addressing major common issues in the financial industry, and overseeing financial conglomerates.
A new "Consumer Rights Protection Bureau" will also be set up under the Consumer Protection Division to handle the operation of the Financial Dispute Mediation Committee and conduct evaluations of financial companies' consumer protection practices. This is a preemptive measure in anticipation of a significant increase in mediation cases if unilateral binding authority is introduced for committee decisions in the future.
With this restructuring, the function of directly handling dispute mediation, previously managed by the Financial Consumer Protection Bureau, will be transferred to product-specific departments within each sector. This decision addresses difficulties in organic response caused by the separation of dispute mediation from departments responsible for product review and policy. For the insurance sector, which has a high volume of disputes, the function will remain under the Bureau to enable a more active approach to dispute resolution.
An FSS official stated, "This restructuring will create a one-stop consumer protection system that takes responsibility for and swiftly manages the entire process from product review to dispute mediation and inspection for each sector. In particular, by having the same department handle both product review and dispute mediation, synergy will be created between these functions, helping to prevent the spread of consumer harm."
Shifting Consumer Protection from Post-Incident Remedies to Preventive Measures
Alongside the organizational restructuring, the FSS also released its "Consumer Protection Improvement Roadmap," which outlines its future plans. The core of this roadmap is to shift the current consumer protection paradigm from post-incident remedies for a small number of victims to preventive protection for the entire population.
To achieve this, the FSS plans to establish a "risk-based consumer protection supervisory system," which will monitor risk factors from a consumer protection perspective, identify risks, respond through supervisory and inspection activities, and then implement corrective measures. In the past, the FSS focused on post-incident remedies such as dispute mediation when large-scale consumer harm occurred, but going forward, the emphasis will be on proactively eliminating risk factors in advance.
The FSS will also pursue measures to further enhance consumer rights, such as guaranteeing financial consumers' access to information and their right to choose financial products, as well as improving the convenience of financial transactions. To prevent unfair changes to financial product conditions-such as opaque interest rate changes-the FSS will strengthen consumer notifications. Additional measures include improving notification and alternative issuance procedures when credit cards are discontinued, and diversifying maturity options for retirement pension deposits, all aimed at strengthening consumers' right to choose financial products.
For financial companies, it was pointed out that the relatively low level of penalties for failures in consumer protection has led them to focus more on the benefits of sales than the costs associated with consumer harm. It was also noted that, although digital technology has improved transaction convenience, the development of corresponding security systems in the financial sector has been insufficient.
Pursuing the Introduction of Special Judicial Police to Combat Financial Crimes Affecting Livelihoods
The FSS is also moving forward with the introduction of special judicial police to combat financial crimes that impact people's daily lives. The SJP system grants limited investigative authority to officials from relevant administrative agencies to improve the efficiency of investigations in specialized fields. Currently, the FSS's SJP activities are limited to investigating unfair trading in the capital markets, but the scope will be expanded to include financial crimes such as voice phishing.
This restructuring follows multiple statements by Lee Chanjin, Governor of the FSS, regarding plans to introduce SJP for financial crimes affecting livelihoods. Governor Lee is also pursuing the granting of ex officio investigative authority to the FSS SJP, which would allow investigators to actively pursue cases upon discovering evidence of a crime. At present, the FSS SJP can only investigate cases referred by the Securities and Futures Commission under the Financial Services Commission, and only when directed by a prosecutor. Governor Lee argued, "Without ex officio investigative authority, it takes more than two weeks for the FSS to begin investigating issues such as stock price manipulation, during which time evidence can be destroyed."
To implement the SJP system, the FSS will establish a "Task Force for Promoting Special Judicial Police for Livelihood Protection" under the Financial Consumer Protection Bureau's Livelihood Protection Response Bureau, and will also set up a Financial Crime Information Analysis Team to analyze and manage information on financial crimes, including the latest criminal methods and trends. The Task Force will work with the Office for Government Policy Coordination and related ministries (such as the Ministry of Justice and the Financial Services Commission) to draft relevant legislative amendments and promote their swift passage through the National Assembly.
An FSS official stated, "With the introduction of SJP, the department in charge of financial crimes affecting livelihoods at the FSS will leverage its high level of expertise and vast information resources to identify and apprehend criminal organizations. By tracking the flow of criminal funds, we will maximize the effectiveness of enforcement by preventing and recovering criminal proceeds."
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