The Financial Services Commission said it will draw up a plan within this month to advance financial holding company governance and improve the process for chief executive officer (CEO) reappointment.
The Financial Services Commission (FSC) on the 15th briefed President Lee Jae-myung at the Blue House state guesthouse on these plans. The FSC is discussing detailed measures for improving financial holding company governance. Through the plan, the FSC will strengthen the role of institutional investors in financial holding companies and raise the rationality of performance-based pay operations. For mutual finance institutions, it will push to revise the Credit Union Act to tighten executive eligibility requirements and block circumvention of reappointment limits through expedients.
By September, the Financial Services Commission (FSC) will work with the Financial Supervisory Service to devise measures to overhaul financial administration and supervision. It plans to improve inspections, sanctions, and licensing across the board—introducing preemptive inspections, banning disclosure of interim inspection findings, activating autonomous correction by financial companies, rationalizing and specifying sanction criteria, and expediting licensing—to bolster trust in financial oversight.
To institutionalize inclusive finance, the Financial Services Commission (FSC) will also pursue a comprehensive evaluation system and the introduction of a chief inclusive finance officer (CIFO). The comprehensive evaluation system will be introduced first to banks this year and expanded to all financial sectors next year. The CIFO will be an executive overseeing inclusive finance strategy and internal controls. The individual credit evaluation system will also be revamped. The plan is to reasonably assess not only past arrears records but also credit recovery status and future growth potential, and reflect them in loan screening. To this end, the FSC will invigorate alternative credit scoring, shorten the period for using arrears histories, and proactively identify and support the credit-vulnerable.
To ensure stable and flexible funding for policy finance for low-income people, a "low-income finance stabilization fund" will be introduced. By pushing to amend the Low-Income Finance Act, the plan is to flexibly and swiftly create and supply new products within 30% of the existing budget. Through this, the interest payback rate for the special guarantee of Sunshine Loan will be lowered from 12.5% to 6.3%, and the supply of Sunshine Loan Youth will also be expanded.
New loan products that strengthen links to welfare and pathways into the formal financial system will also be pursued. After in-person screening, low-interest (4.5%), long-term (10-year) loans with a limit of 1 million won will be supplied, and arrears information will be used to detect early signs of crisis and connect borrowers with welfare services. In addition, if borrowers faithfully repay 10,000 won per month, a plan to link them to the formal financial system will also be pursued.
Support for small business owners will also be expanded. The Financial Services Commission (FSC) plans to pilot-apply the artificial intelligence (AI)-based "small business–specialized credit scoring model (SCB)" to bank loans in August. SCB refers to a credit scoring model that evaluates small businesses' future growth potential using sales, industry, and other data. By August, the FSC will expand the scope from the current seven banks to 16 banks and apply it to a total of 2 trillion won in loans.