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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] Seoul – The South Korean government announced a sweeping financial regulatory overhaul that will abolish the Financial Services Commission (FSC) after 17 years, reinstating the Financial Supervisory Commission (FSCOM) to strengthen financial oversight and consumer protection.
The decision was finalized at a high-level policy coordination meeting between the government, ruling party, and presidential office on September 7. Under the reform, the current FSC will be dissolved and its functions divided as follows:
Financial policy functions (market development and promotion) will be transferred to the newly established Ministry of Finance and Economy.
Financial supervisory functions (prudential oversight, business conduct, licensing and approvals) will be reassigned to the newly reestablished Financial Supervisory Commission (FSCOM).
The new FSCOM will operate as a smaller deliberative body, divided into two specialized subcommissions:
The Securities and Futures Commission, responsible for prudential regulation and licensing.
The Financial Consumer Protection Commission, dedicated exclusively to consumer rights and market conduct.
Additionally, the Financial Consumer Protection Bureau, which currently exists within the Financial Supervisory Service (FSS), will be elevated into an independent Financial Consumer Protection Agency with its own investigative and enforcement powers.
Industry Concerns
While the government emphasized that the reform aims to improve regulatory efficiency and enhance consumer protection, financial institutions have expressed concerns over a potential increase in compliance burdens due to a dual supervisory structure involving both the FSCOM and the new consumer protection agency.
Background
The current FSC was established in 2008, consolidating financial policy and supervisory functions. The new reform, once implemented, will reshape the financial regulatory landscape into four separate entities:
Ministry of Finance and Economy
Financial Supervisory Commission (FSCOM)
Financial Supervisory Service (FSS)
Financial Consumer Protection Agency
This marks the most significant restructuring of South Korea’s financial regulatory framework in nearly two decades.
알파경제 Paul Lee 특파원(hoondork1977@alphabiz.co.kr)
