Platforms like Naver Face Stricter Financial Sales Regulations

Financial Services Commission Revises Electronic Financial Transactions Act
Digital Financial Innovation Plan to Be Announced This Month
Strengthening Consumer Protection and Fair Competition Responsibilities

[Asia Economy Reporter Kim Hyo-jin] Financial authorities are pushing for measures to hold electronic financial service providers such as Naver Financial accountable for the sale of financial products. This move is interpreted as a response to concerns that big tech (large information and communication companies) and fintech (financial technology) firms entering the financial industry are not subject to the same regulations as traditional financial companies, which could lead to consumer harm and increased turmoil in the overall financial market.

According to financial authorities on the 16th, the Financial Services Commission is preparing to establish the legal basis for such regulations through amendments to the Electronic Financial Transactions Act and is refining the details. The authorities’ policy is to enhance accountability and strengthen consumer protection functions by establishing clear behavioral regulations for cases where these companies operate in partnership or linkage with financial firms.

Financial authorities are reportedly considering measures to require platform operators to provide sufficient explanations about advertised products and to clearly state that the products are neither directly produced nor guaranteed by them, thereby preventing consumer misunderstandings. These measures will be reflected in the 'Comprehensive Digital Finance Innovation Plan' to be announced by the financial authorities later this month.

Amid the government’s innovation drive, non-financial companies’ entry into the financial sector has been active, sparking heated debates over 'regulatory fairness.' A representative example is the controversy surrounding the so-called 'Naver Account' launched by Naver Financial, a subsidiary of Naver, in partnership with Mirae Asset Daewoo.

Although it is not a typical 'bank account' that pays interest at a fixed rate and protects principal and interest up to 50 million KRW, it can be perceived as the same type of account. Financial authorities have recommended changing the product name to include 'Mirae Asset Daewoo' or similar, so that consumers can more easily distinguish its nature.

Concerns are also rising about the possibility of substandard products being sold through platform operators, especially as market-wide vigilance has increased due to recent incidents related to financial investment products. One example is 'Nexfun,' an online investment-linked finance (P2P) company that suspended operations after being investigated on fraud charges.

In this regard, Eun Sung-soo, Chairman of the Financial Services Commission, stated at a seminar commemorating Information Security Day on the 7th, "We will prepare the foundation for financial stability, consumer protection, and fair competition in anticipation of big tech’s full-scale entry into the financial industry."

A financial industry official said, "Platform operators have a close relationship with consumers in the market and have built a certain level of trust, which may lower consumers’ guard regarding financial products sold through these channels," adding, "Balanced measures are needed to achieve the goal of consumer protection without hindering the flow of financial innovation."

This content was produced with the assistance of AI translation services.