As the financial supervision system reform plan promoted by the Lee Jae-myung government settles on a 'small package' structure that places the Financial Supervisory Service and the Financial Consumer Protection Agency (FCA) under the Financial Services Commission, voices demanding alternatives arise within the Financial Supervisory Service.
The question is whether separating and establishing the FCA can truly lead to a substantial enhancement of financial consumer protection. There are concerns that the separation of supervisory and inspection tasks from consumer protection duties may hinder synergy.
According to the Presidential Committee on Policy Planning on the 22nd, a preliminary draft of the government organization restructuring was reported to President Lee Jae-myung on the 3rd. The report included the separation of budget functions from the Ministry of Economy and Finance, adjustments to the functions of the Financial Services Commission, and the reorganization of the financial supervision system into a small package.
After this news broke, discontent has been growing within the FSS. The FCA is viewed as a kind of difficult territory even within the Financial Supervisory Service. This is due to the need to prioritize consumer complaints rather than leveraging expertise in specific areas such as banking, insurance, and securities. There is significant concern that if they move to the separated FCA, they may have to handle only consumer complaint tasks.
In the past, employees could enhance their understanding of products and demonstrate expertise in customer service through rotational assignments; however, there are fears that these effects could disappear if the FCA is separated. An FSS official noted, "If there is no expertise in consumer complaint tasks, it would be virtually impossible to make judgments in the dispute process for consumers," adding, "If the organization is separated and employees without inspection and supervisory experience only take charge of complaints, consumer protection could actually regress."
On the 21st, 1,539 FSS employees distributed a statement opposing the separation of the FCA, saying, "To achieve 'true financial consumer protection', we oppose the separation of the FCA," and noted that "the separation of the FCA poses a significant risk of weakening collaboration between soundness and business supervision, inspections, and consumer protection, as well as hindering the efficient use of supervisory resources."
High-ranking officials at the FSS are also responding. Recently, high-ranking officials visited the National Policy Committee and reportedly conveyed the stance that while strengthening the role and function of consumer protection is good, the organization should remain within the FSS.
One of the proposals to maintain consumer protection functions within the FSS while enhancing its capabilities is to elevate the FCA to the status of the FCA while keeping it as an internal organization of the FSS. This structure is similar to when the Bank of Korea had the Bank Supervisory Service as part of its internal structure.
Because the scenario is being discussed where the chairman of the Financial Services Commission also serves as the head of the FSS, it is believed that it is not impossible to place the FCA within the FSS. In this case, the consumer protection function could be strengthened while also achieving synergy with the existing supervisory and inspection functions of the FSS, according to FSS insiders.
Introducing 'unilateral binding effect' is also one of the methods to enhance consumer protection functions without separating the FCA. Unilateral binding effect refers to a system where, if a consumer accepts a settlement proposal in a financial dispute, the corporation must follow it unconditionally. It is considered a significant way to greatly enhance consumer rights if limited to disputes involving modest amounts.
The Presidential Committee on Policy Planning has also mentioned the introduction of unilateral binding effect, stating that it could be applied to small disputes ranging from 10 million to 20 million won.
In a report titled 'True Growth Strategy for Korea' released last month by the Presidential Committee on Policy Planning, it was stated, "There is a need to introduce the unilateral binding effect system," adding that "most countries, including the United Kingdom, Germany, Australia, and Italy, grant various types of binding effects to the decisions of national dispute resolution bodies."
An official from the financial investment industry said, "While strengthening consumer protection poses a significant burden for the industry, the separation and establishment of the FCA could pose risks from another perspective," and added, "Comprehensive re-evaluation of better alternatives may be necessary."