Eun Sung-soo: "Received Feedback on Financial Consumer Protection Act Issues... 50-Year Mortgage Research Possible" (Update)

Meeting with Major Bank CEOs on the 1st, Eun Sung-soo
Household Debt Measures to be Announced in Mid-April... Research if 50-Year Mortgage Situation Changes"

[Image source=Yonhap News]

[Asia Economy Reporter Song Seung-seop] On the 1st, major domestic bank CEOs expressed difficulties and complaints regarding the implementation of the Financial Consumer Protection Act (FCPA) during a meeting with Eun Sung-soo, Chairman of the Financial Services Commission.

Chairman Eun discussed cooperation measures for the early stabilization of the FCPA with major bank CEOs on the morning of the 1st at the Bankers Association building in Jung-gu, Seoul. He told the CEOs, "'Ppalli-ppalli' (hurry-hurry) and 'consumer protection' are difficult to reconcile," and added, "I hope you think of it as completely changing the previous financial product sales practices and put your heads together to consider ways to stabilize the FCPA."

In response, the CEOs voiced difficulties related to the FCPA. After the meeting, Chairman Eun met with reporters and said, "Although the financial authorities created the law, they do not fully understand the field," emphasizing, "If you inform us about what happens at the counters during the six-month period, we will try to improve and stabilize it." He also added, "Although it was created to protect consumers, if it causes inconvenience to consumers, that is a problem, so we will consider ways to shorten the time."

There was also a CEO who conveyed that the prohibition of fund subscription for one month before and after a loan actually harms consumers. Chairman Eun said, "One CEO mentioned that 'the restriction on tied selling could harm consumers who want to take out loans and subscribe to funds simultaneously,'" and added, "Although it was said that it is allowed within 1%, we will consider whether it is realistically possible."

Regarding a series of criticisms that the process to comply with the explanation obligation is cumbersome, he explained, "There is no need to hand out thick investment prospectuses; showing them on the screen is sufficient. They said reading the product explanation is long, but only the key points need to be read."

Meanwhile, Chairman Eun gave a positive response to the proposal by Lee Nak-yeon, Co-Chairman of the Democratic Party of Korea, for a ‘50-year maturity mortgage loan national guarantee system’ to support young and newlywed generations in purchasing their first home in life.

Chairman Eun said, "If the mortgage period is long, the amount paid decreases," and added, "We are currently preparing to introduce a 40-year mortgage, and the 50-year maturity mortgage proposal that came out the day before was probably meant to suggest that a longer period would be better to reduce the burden on young people." Regarding the controversy over the effectiveness of ultra-long mortgages, he said, "For example, even if you take out a 40-year mortgage, it does not mean you have to repay it until you are 70 after borrowing at 30. Usually, people move houses within 7 to 10 years. They repay as they save money, so it can serve as a housing ladder. With a 50-year mortgage, the cost could be reduced further."

Regarding the household loan advancement plan scheduled to be announced next month and the possibility of easing household loan regulations for young people and the homeless, he said, "There is a consensus that household loans must be stabilized because they could become a bomb later, but if the Debt Service Ratio (DSR) regulation is strengthened, young people will have a loan gap because they have no income."

He continued, "We are considering easing the Loan-to-Value ratio (LTV) for young people and the homeless who have difficulty securing housing stability," but expressed concern, saying, "However, we have sent a consistent message to reduce household loans and prevent real estate speculation, so there is concern that easing the LTV for young people and the homeless could send a signal of policy retreat. This is a part we are worried about."

Regarding the amendment to the Microfinance Act, he emphasized that "banks also benefit." Chairman Eun said, "I explained to the bank CEOs that banks cannot be detached from the Korean financial system," and added, "If microfinance had not been supplied last year, banks could have borne the resulting bad debts. Banks should actively cooperate in supplying microfinance." Regarding the Ssangyong Motor issue, he said, "I heard that the Korea Development Bank did not receive separate contact from HAAH Automotive," and added, "We have been trained to prepare for various cases, so we will see the results and do what is necessary."

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