Urgent Issue... Financial Firms and Authorities Restructure Workforce Ahead of the Financial Consumer Protection Act

Increase in Disputes and Supervision Tasks Expected Ahead of Financial Consumer Protection Act Enforcement
Financial Services Commission Adds Four Staff Members, Including One Each at Grades 5 and 6, to Related Departments
Financial Companies Expand Consumer Protection Expertise in Outside Director Candidate Pool

[Asia Economy Reporter Song Seung-seop] As the Financial Consumer Protection Act (FCPA) is set to be enforced on the 25th, authorities and financial companies have reportedly completed related personnel restructuring. This is due to the introduction of a virtually new financial system, an increase in disputes between financial companies and consumers, and the expected rise in supervisory duties accordingly.

According to the financial sector on the 22nd, the Financial Services Commission (FSC) announced the legislative notice last month for the “Partial Amendment to the Enforcement Rules of the Organization of the Financial Services Commission and Its Affiliated Agencies,” which increased personnel by four and changed some grade quotas to multiple job series.

According to the amendment, to respond to new tasks and strengthen financial consumer protection functions, two personnel (one each at grades 5 and 6) will be added to the Financial Consumer Policy Division, and two personnel (one each at grades 5 and 6) will be added to the Corporate Accounting Team to cope with increased workload due to the expansion of external audit targets and to ensure accounting transparency.

Some grade quotas at the FSC were changed to multiple job series. As a result, one grade of “Technical Secretary or Computer Affairs Officer” was eliminated, and one series of “Secretary, Technical Secretary, Administrative Officer, or Computer Affairs Officer” was added. The FSC explained, “This change in some grade quotas was made to efficiently respond to changes in the administrative environment” and “to improve and supplement deficiencies found in the operation of the current system.”

The FCPA’s core is to apply the six major sales regulations (principle of suitability, principle of appropriateness, duty of explanation, prohibition of unfair sales, prohibition of improper solicitation, prohibition of false or exaggerated advertising), which were previously applied only to certain products, to all financial product sales for consumer protection. Violations can result in punitive fines of up to 50% of the product sales amount imposed on financial companies and fines of up to 100 million KRW on the sales staff involved.

With this increase, the FSC’s personnel count rose from 217 to 221. Since starting with 155 personnel in March 2008, the FSC has steadily expanded its workforce and reorganized its structure in response to environmental changes. In January last year, seven personnel were added, including dedicated staff for strengthening international financial negotiations, litigation specialists for systematic handling of lawsuits, and personnel for analyzing and utilizing financial public data. In March, the FSC extended the two-year term of four temporary personnel assigned to regulatory exemptions for innovative financial services.

Commercial Banks Also Expand Outside Director Candidate Pool in Consumer Protection

This measure is also part of organizational restructuring ahead of the FCPA enforcement. There have been many expectations inside and outside the financial sector that disputes between financial companies and consumers will increase due to the FCPA enforcement. It is argued that consumers’ rights are significantly strengthened and the legal framework is insufficient, making initial confusion inevitable. Industry insiders have voiced concerns about the extensive content and insufficient time for frontline staff training.

Commercial banks have been steadily identifying related candidates through their Outside Director Candidate Recommendation Committees. Shinhan Financial Group had 16 candidates each in the financial and accounting fields early last year but recently reduced both by two to 14. Meanwhile, the number of outside director candidates in the consumer protection field increased from 7 to 10. The proportion of this field in the overall candidate pool also rose by 2.5 percentage points from 6.4% to 8.5%.

KB Financial Group reduced its accounting field outside director candidates from 15 (15.5%) to 11 (3.1%). The consumer protection field was renamed ESG (Environment, Social, Governance) and Consumer Protection, adding two personnel. In the case of Hana Financial Group, while the overall outside director candidate pool decreased, the proportion of legal-related candidates increased from 17.6% to 18.1%.

Commercial banks on the ground are focusing on strengthening the capabilities of frontline personnel in preparation for the FCPA. Woori Bank conducted employee training through its internal knowledge-sharing platform, “WeTube.” NH Nonghyup Bank has also completed training for executives and branch managers.

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