The Financial Services Commission revised supervisory regulations to include all electronic financial service providers in the affiliated financial companies under the Financial Conglomerates Act and subordinate regulations, bringing them under group-level internal controls and risk management.
The Financial Services Commission (FSC) said it approved a partial amendment to the Financial Conglomerates Supervisory Regulations containing these measures at the 14th regular meeting on the 31st.
Fintech and big tech corporations have expanded their business scope beyond electronic financial services to licensed financial services on platform-based models, steadily increasing their influence in the financial market. As intra-group interconnectedness deepened, concerns were raised that operational risks could spill over to other affiliates and amplify market volatility, but some electronic financial service providers did not qualify as affiliated financial companies under the Financial Conglomerates Act and subordinate regulations, creating a problem in which they were excluded from group internal controls and risk management.
The Financial Services Commission (FSC) said this discrepancy stemmed from the statutory scope of financial companies. Current laws define financial companies as firms engaged in financial business and related industries, and within this, financial business refers to Finance and Insurance under the Korea Standard Industrial Classification (KSIC). However, because concurrent businesses are common among electronic financial service providers, there are both providers classified as Finance and Insurance under the KSIC and those that are not, so even the same type of electronic financial service provider could be included or excluded from the definition of a financial company under the Financial Conglomerates Act and subordinate regulations depending on the KSIC category.
In response, the Financial Services Commission (FSC) revised the supervisory regulations to include electronic financial service providers not classified as Finance and Insurance under the KSIC as affiliated financial companies under the Financial Conglomerates Act and subordinate regulations, the same as those classified as Finance and Insurance. The FSC said this will block regulatory arbitrage and ensure comprehensive group-level risk management.
The Financial Services Commission (FSC) expects the amendment to the supervisory regulations to enhance the effectiveness of group-level internal controls and risk management for financial conglomerates, while further strengthening sound management and financial consumer protection.