[Economy Pulse] Financial Consumer Protection under the People’s Sovereignty Government: The Key Is Execution

What Matters Is Not the Existence of Systems, but Delivering Good Outcomes
Prevention of Harm and Understanding-Centered Design Are Essential

The People’s Sovereignty Government is a pragmatic declaration focused on genuinely improving the lives of every citizen. It prioritizes results over formality, viewing the true essence of policy as the actual changes it brings to people’s lives. Financial consumer protection is the area where this philosophy must be most clearly demonstrated. The question should not be whether a system exists, but whether it is truly effective in the marketplace.

Four years after the implementation of the Financial Consumer Protection Act, issues such as misselling and consumer damage remain severe. In 2024, the Hong Kong H Index ELS resulted in losses across 170,000 accounts, amounting to approximately 4.6 trillion won, and financial complaints have increased, particularly in the banking, small and medium-sized financial institutions, and investment sectors. This is the outcome of having systems in place without proper execution.

In response, the National Policy Planning Committee has proposed a reform to strengthen financial consumer protection by separating the Consumer Protection Bureau of the Financial Supervisory Service into an independent organization called the “Financial Consumer Protection Agency.” This is a structural attempt to resolve conflicts of interest and establish a consumer-centered supervisory system. However, what truly matters is not the organization itself, but the ability to effectively protect consumers in practice.

First, execution is not merely a declaration that systems or regulations exist, but rather whether there is a structure in place that can actually protect consumers in reality. In this context, the UK’s Financial Conduct Authority (FCA) “Consumer Duty” and Germany’s “Beratungspflicht” (duty to advise) are evaluated as practice-oriented models that go beyond declarative protection by clearly defining the responsibility of financial companies to deliver genuinely good outcomes for consumers. These systems do not rely solely on product explanations or signed consent forms; instead, they focus on whether consumers have understood the information, made reasonable decisions, and ultimately avoided harm. This is a regulatory philosophy centered on consumer experience and outcomes, not just procedural compliance or formal explanations.

Second, execution begins not with post-incident remedies, but with proactive prevention and a sense of rapid response. A system that only reacts after damage has occurred cannot adequately protect consumers. Technologies such as AI-based abnormal transaction detection, early blocking systems for voice phishing, and consumer risk warning platforms form the technical foundation of execution. However, technology alone is not enough. Financial consumer protection competency education must be provided in parallel, enabling all financial consumers, including vulnerable groups, to respond to changes in the financial environment. When we can predict, warn, and block risks while empowering consumers to defend themselves, financial consumer protection becomes a reality rather than a mere policy declaration.

Third, execution is the ability to design systems in the language of consumers. Many regulations focus on “providing information,” but in reality, most consumers do not understand the majority of that information. Complex terms and conditions, difficult financial terminology, and unfriendly user interfaces (UIs) create a structure that appears to provide information while actually excluding consumers. In the digital era, execution begins with “understanding-centered design”?building structures that ensure information is truly comprehensible.

As finance becomes more digitalized and products more sophisticated, consumers are exposed to increasingly complex risks. In such circumstances, what matters is not the mere existence of systems, but whether they are truly effective. As Daron Acemoglu and Simon Johnson emphasized in “Power and Progress,” the value of technological and institutional progress is realized only when it improves the lives of the many, not just the power of a few. The same applies to effective financial consumer protection. When consumers can truly understand, make their own choices, and be protected from harm, financial consumer protection moves beyond declarations to restore trust and deliver tangible improvements in quality of life.

Jung Unyoung, Chairman of the Finance and Happiness Network

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