The Financial Supervisory Service said on the 20th that it held the first Consumer Risk Response Council to review major risk factors related to financial consumers and discuss response measures.
This council is the top-level consultative body within the Financial Supervisory Service (FSS) established to build a risk-based consumer protection supervision system under the "financial consumer protection improvement roadmap." Attendees included the FSS governor, the senior deputy governor, the head of the Financial Consumer Protection Bureau, and the deputy governor general in charge of consumer protection.
The council identified as a major risk factor the spread of the "debt-fueled investing" phenomenon, as stock price volatility has increased and outstanding margin loan balances have surged. It noted that if excessive leveraged investing expands, especially among older adults, a stock price decline could trigger forced sell-offs, sharply increasing consumer harm. In response, the Financial Supervisory Service (FSS) will guide securities firms to fully explain the core risk factors of credit transactions to consumers and issue consumer alerts immediately when necessary. At the same time, it plans to induce stronger risk management for credit products across the entire financial sector, including banks, savings banks, card companies, and insurers.
With more funds flowing into the stock market and sales of equity-linked products rising, the potential for misselling high-risk products was also cited as a major risk factor. The Financial Supervisory Service (FSS) will guide financial companies to sufficiently explain core risk factors when selling products and, through meetings with sellers, urge stronger internal risk management. It will also actively consider inspections when misselling is a concern.
During periods of heightened financial market volatility, the potential for financial accidents and IT system errors also became a key topic. The Financial Supervisory Service (FSS) is operating a 24-hour monitoring system through its financial accident intake center and, in the event of a serious incident, will immediately link to on-site inspections while requiring financial companies to check IT systems and strengthen internal controls. It particularly pointed out that recent IT incidents stemmed from basic internal control shortcomings and stressed the need for thorough management to prevent recurrences.
In the insurance sector, during the overhaul of the commission system for general agencies (GA), concerns were raised about the potential for misselling due to planner turnover and inducement to replace or switch contracts. In response, the Financial Supervisory Service (FSS) said it will examine the appropriateness of key performance indicators across the entire process from product design to sales, maintenance, and claims, and announced a strict response policy, including emergency inspections, against acts that disturb solicitation order.
The council also discussed responding to livelihood-infringing crimes that use virtual accounts and bank accounts as a key task. The Financial Supervisory Service (FSS) will guide card companies to strengthen management of virtual accounts and promote system improvements to prevent misuse of banks' free-installment savings accounts, while considering upgrades to alert levels as needed and issuing consumer alerts against investment fraud and voice phishing schemes that exploit instability in the Middle East.
Along with this, the Financial Supervisory Service (FSS) will maintain a system that swiftly responds to consumer risk factors by continuously monitoring media reports, industry trends, and market changes, and will enhance financial education to improve consumers' ability to respond.