Financial regulators vow reform after FSC breakup plan collapses

(FSC)

South Korea’s financial regulators vowed on Monday to press ahead with reforms to strengthen consumer protection and accountability, after the government dropped a controversial plan to dissolve the Financial Services Commission (FSC).

FSC Chairman Lee Eog-weon and Financial Supervisory Service (FSS) Governor Lee Chan-jin held their first emergency meeting since the retreat, promising to fix inefficiencies in the dual system that critics say has fueled financial accidents and weak accountability.

“We humbly accept the criticism that the FSC and FSS have failed to meet public expectations,” the two chiefs said in a joint statement. “We will overhaul all aspects of financial administration and supervision with the spirit of self-reflection and determination to strengthen the public nature and transparency of financial consumer protection functions.”

The regulators laid out three priorities: enhancing consumer safeguards, shifting supervisory practices to focus more on on-the-ground operations and customer needs, and raising transparency as well as public accountability in decision-making.

They added that a full review of administrative and supervisory processes would follow, underpinned by legal and structural reforms. That will include closer scrutiny of hacking incidents, tighter policing of incomplete sales of financial products, and new measures to minimize consumer disruption, such as those seen in the previous week’s fire at the National Information Resources Service that temporarily disabled mobile IDs.

FSC’s Lee, who convened an emergency executive meeting afterwards, underscored the urgency of the effort. “We must fundamentally resolve issues such as recurring consumer harm from financial accidents and crimes, the lack of public accountability and transparency in financial administration, insufficient field communication, and inadequate support for livelihoods and the real economy,” he said.

For his part, FSS’s Lee held a “Financial Consumer Protection Reinforcement Resolution Meeting” at his organization that day with all executives and staff. He announced the decision to elevate the Financial Consumer Protection Office to a comprehensive consumer protection headquarters and reorganize the organization to handle complaints, disputes, product reviews, supervision, and inspections in a single location. The “Preemptive Financial Consumer Protection Strengthening Task Force,” which was launched on September 4th, 2025, will be reorganized into the Financial Consumer Protection Planning Group. Consumer protection measures will be strengthened across the entire process from product design to review and sales.