Lee Eog-weon, chair of the Financial Services Commission, and Lee Chan-jin, governor of the Financial Supervisory Service, will face a National Assembly audit for the first time. Household loan regulations, real estate project financing (PF) delinquencies, and hacking incidents in the financial sector are expected to be key points of contention.
According to the financial sector on Oct. 19, the National Policy Committee of the National Assembly will begin a national audit of the Financial Services Commission on Oct. 20 and the Financial Supervisory Service on Oct. 21.
The core issue is household loan regulations. Earlier, the government rolled out the June 27 household loan regulations that cap home mortgage loans at 600 million won, and the "Oct. 15 real estate stabilization measures," which expand regulated areas to all of Seoul and 12 locations in southern Gyeonggi Province and limit the loan-to-value (LTV) ratio in those areas to 40%. The ruling party said this was "a desperate measure to curb real estate speculation," but the opposition has pushed back, saying "the dream of owning a home has been crushed," foreshadowing fierce clashes during the audit.
Even after unveiling the June 27 household loan regulations and the Sept. 7 supply measures, the government failed to rein in housing prices, prompting a bold move to expand regulated areas at once and lower LTVs there. As the loan cap for properties under 1.5 billion won has effectively decreased, the government faces criticism that even caps for end-user loans have been reduced.
The question of regulatory responsibility by financial authorities is also a major topic after the Lotte Card hacking incident exposed personal data of as many as 2.97 million customers. Previously, Lotte Card had obtained the Personal Information Protection Management System, labeled as the highest level of domestic security certification, from the Financial Security Institute before suffering the data leak.
The issue of distressed real estate PF, which has been particularly problematic in the mutual finance sector, is also expected to come under scrutiny. The National Policy Committee summoned Kim Yun-seok, chair of the National Credit Union Federation of Korea, and Kim In, chair of the National Credit Union Federation (Saemaul Geumgo), as witnesses for the Oct. 21 audit. The committee plans to examine whether there are problems with the financial authorities' business feasibility evaluations for real estate PF.