The heads of Korea’s two financial watchdogs decided to focus on managing household debt, self-employed people’s debt, and non-banking risks for financial stability.
“In the New Year of 2022, the Financial Services Commission (FSC) will promote the stability of the financial market by banding together with the Financial Supervisory Service (FSS),” said Koh Seung-beom, chairman of the FSC after a meeting with Jeong Eun-bo, governor of the FSS at Yeouido, Seoul, on Jan. 6.
At the New Year’s meeting, Chairman Koh and Governor Jeong saw eye to eye on the direction of financial supervision and household debt management for this year.
“I think that our three major financial stability tasks for 2022 are household debt, self-employed people’s debt, and non-banking risk management,” Koh said, “Since the second stage of debt service ratio (DSR) regulation will be implemented this year, we will take flexible management and protection policies for the marginalized and end-users.”
“Extending loans for self-employed people is one of the three major financial stability tasks,” Koh said, regarding the end of COVID-19-related financial support such as extending the maturity of small business loans and credit pardons.
“We are closely analyzing financial support measures and will continue to consider real economy situations,” he said.
“We plan to reinforce FSS personnel and deploy them in the right place to actively respond to major issues such as recent digital transformations of finance and continue to support the protection of financially vulnerable groups,” Koh added.
“I call on FSS staff members to thoroughly supervise the management of new types of risks and the protection of financial consumers.”
Jeong showed his will to expand the FSS’ supervisory capabilities and make the FSS implement the proactive supervision of the financial industry for financial stability.
“With the reinforcement of the FSS’ human resources and organization, we will expand the FSS’ supervisory capabilities,” Jeong said.
“In particular, we will actively communicate with the market with an emphasis on proactive consumer protection while promoting the balance of pre- and post-financial business supervision based on laws and principles.”
In fact, the FSS is set to recruit 80 new people with the approval of the budget for fiscal 2022. In addition, it will expand its organization such as the establishment of a financial data room.
“The Financial Investigation Unit (FIU) examines, analyzes, and provides it to investigative agencies when it is reported by a financial company,” Koh said with respect to an embezzlement case involving an Osstem Implant employee.
“However, I cannot comment on the case in detail now due to related law. Please wait for the results of the police’s investigation into the case.”
“However, apart from judicial procedures, we will consider taking any necessary measures in terms of disturbances in the stock market, investor protection or minority shareholder issues,” Koh added.
In the meantime, Koh met with the heads of private think tanks on January 14 and had a discussion about financial market conditions, industry forecasts and relevant policy issues.
At the meeting, think tank officials suggested ideas on facilitating digital transformation and boosting competitiveness in the financial industry, fostering an environment for fair competition between financial institutions and big tech businesses and promoting capital markets while guaranteeing investor protections among others.
Koh stated that the financial authorities will take their suggestions into account when implementing various policies in 2022 and pledged to pursue the following meavsures, including upgrading relevant regulations to allow expansion of business areas for financial companies in line with shifting conditions in financial markets while promoting digital transformation and more platform-based services; applying the principle of “same rules for same services” when dealing with the relationship between big tech businesses and financial companies; seeking innovative ways to promote capital markets while ensuring investor safeguards and encouraging prudent management and strengthening soundness of financial institutions in different sectors.
