Governor Lee Chanjin of the Financial Supervisory Service Highlights "Financial Consumer Protection" as Key Theme in Work Report

Emphasis on "Consumer Protection" in All-Department Reports
Will the Principle of "Unilateral Binding Force" Be Strengthened in Supervision and Inspection?

Lee Chanjin, Governor of the Financial Supervisory Service. Photo by Hwang Yoonju

The central theme of the first all-department work report conducted by Lee Chanjin, Governor of the Financial Supervisory Service, since taking office was "protection of financial consumers." It is expected that the focus on consumer protection will be further strengthened in the supervision and inspection processes of financial companies going forward. In particular, whether the "unilateral binding force" principle will be applied has emerged as a key topic of interest in the financial industry.

According to financial authorities and the industry on August 27, Governor Lee completed the work reports from all departments the previous day (August 26). Reports from each department-including banking, insurance, financial investment, and consumer protection-lasted at least an hour each, and it was reported that "protection of financial consumers" was a consistent focus throughout all presentations.

An official from the financial authorities stated, "Immediately after taking office, Governor Lee emphasized the concept of a 'one team' and cited the protection of financial consumers as the top priority during communications with the Financial Services Commission," adding, "In the work reports as well, the common theme across all departments was the protection of financial consumers."

Previously, the National Policy Planning Committee also reported to the Presidential Office a plan to separate the "Financial Consumer Protection Department" under the Financial Supervisory Service and elevate it to an independent "Financial Consumer Protection Agency." When reporting to the committee, the Financial Supervisory Service also proposed establishing a "Financial Consumer Protection Evaluation Committee" led by private-sector experts, as well as introducing unilateral binding force in dispute mediation, among other measures.

This approach is expected to be reflected not only in dispute mediation but also in supervisory and inspection work. Whereas the principle of financial consumer protection was previously considered only as a reference in the supervision process, it is now anticipated that the evaluation of consumer protection by financial companies will be examined more rigorously.

The financial industry is paying close attention to this shift in the supervisory authority's principles. Previously, the self-responsibility of financial consumers was emphasized alongside other considerations, but with the focus now on consumer protection, unilateral binding force is expected to become more prominent. Unilateral binding force means that if a dispute arises between a financial company and a consumer, and the consumer agrees to a mediation proposal issued by the financial authorities, the financial company is required to comply unconditionally.

Having completed the work reports, Governor Lee will begin a series of meetings with industry CEOs, starting with the banking sector on August 28, followed by insurance (September 1), savings banks (September 4), and financial investment (September 8). As Governor Lee has emphasized the principle of "protection of financial consumers," there is considerable interest in what message he will deliver in his first meeting with the banking sector. The biggest issue facing the banking sector this year is the calculation of fines related to Hong Kong H Index equity-linked securities (ELS). Another major topic is whether the Fair Trade Commission will impose fines regarding allegations of collusion on the loan-to-value (LTV) ratio for real estate-backed loans.

However, Governor Lee will not attend the breakfast meeting of the heads of the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) scheduled for August 27, the day before the banking sector meeting. An official from the Financial Supervisory Service stated, "The Governor does not attend the breakfast meeting of the five major bank CEOs," adding, "A message will be delivered during the opening remarks at the banking sector meeting on August 28."