Debt Consolidation Loans and MyData... Will Financial Companies' Claims of 'Reverse Discrimination Systems' Be Cut?

Financial Services Commission Chairman Ko Seung-beom Emphasizes 'Same Function, Same Regulation' Principle
Weakening Platform Companies' Dominance Inevitable... Criticism of Excessive Regulation

[Asia Economy Reporter Kiho Sung] As financial authorities announce a strong regulatory drive targeting financial platform companies, big tech (large information and communication companies) and fintech firms are becoming increasingly tense. Since Financial Services Commission Chairman Seungbeom Ko emphasized the principle of 'same function, same regulation,' it is expected that traditional financial companies will soon take action to revise the system they have claimed to be 'reverse discrimination.' If additional regulations are fully implemented, it could also affect the platform dominance of related companies.

Some express concerns that the financial authorities, who had actively promoted the entry of big tech and fintech companies into finance to foster financial innovation and enhance consumer benefits, may abruptly change direction after a leadership change and become trapped in excessive regulation.

According to the financial sector on the 10th, Chairman Seungbeom Ko said to reporters after the first on-site meeting with small and medium-sized enterprises and small business organizations at the Korea Federation of SMEs the previous day, "We will uphold the principle of same function, same regulation for big tech." Regarding the possibility of additional regulations, he added, "We will continue to review that part."

The principle of same function, same regulation is a fundamental principle at the Bank for International Settlements (BIS) level, stating that the same regulations should apply to identical business activities across sectors such as banking, insurance, and securities. The issue of same function, same regulation arose when the Financial Services Commission judged on the 7th that recommended financial products on big tech and fintech platforms constitute 'intermediation' rather than 'advertising.' According to the financial authorities' judgment, big tech and fintech companies must cease related services from the 24th, when the Financial Consumer Protection Act ends.

With the Financial Services Commission declaring its stance on additional regulations, the focus is on which areas will see strengthened regulations. Traditional financial companies have voiced that regulations favor large platform companies, resulting in reverse discrimination. The most recent controversy involved refinancing loan platforms. Financial companies argued that they could become dependent on big tech due to commission issues.

The MyData service, whose initial implementation target was delayed by five months to January next year, is also a system where additional actions from financial authorities may arise. The banking sector has criticized that the information provided by big tech is limited and that it blocks the use of banks' face-to-face counters.

In the case of card companies, they have complained that pay service small-amount deferred payments and credit card merchant fees create an uneven playing field. They argue that allowing big tech companies without credit licenses to effectively operate card businesses without fee regulations has created another 'uneven playing field.'

There is also an interpretation that the financial authorities' change in stance may signal a shift away from the previous focus on supporting fintech companies' innovative services through regulatory sandboxes. Since April 2019, the authorities have granted up to four years of regulatory suspension or exemption for services designated as innovative financial services under the financial regulatory sandbox system. The sandbox has designated a total of 153 innovative financial services, including loan comparison services, fractional overseas stock investments, credit card remittance services, and real-name verification services. Among these, 88 services are being tested in the market, and 132 services are scheduled to be launched in the second half of this year.

A financial sector official said, "Currently, as big tech's influence grows, there are many cases where collaboration increases even if disliked," adding, "We hope that through the Financial Services Commission's recent measures, fair competition between financial companies and big tech will be achieved."

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