Financial Supervisory Service. [Photo=Yonhap News]

The Financial Supervisory Service (FSS) announced an organizational restructuring plan on the 22nd, establishing a new 'Consumer Protection Headquarters' directly under the Governor. This move comes after a previous proposal in September to separate the consumer protection division faced internal opposition, leading the FSS to shift its direction towards strengthening internal oversight rather than organizational separation.

With this restructuring, the FSS stated it will transition its consumer protection function from a post-dispute resolution focus to a pre-emptive approach, building a system for company-wide consumer protection management. Additionally, a task force (TF) will be officially established to introduce a special judicial police force for civil financial crimes.

The newly established Consumer Protection Headquarters will be directly under the FSS Governor and will oversee all consumer-related policies and supervisory functions.

Previously, the FSS had considered separating its consumer protection functions into an independent consumer protection agency to enhance its autonomy. However, this plan was abandoned due to strong internal resistance. Concerns were raised that separating consumer protection from inspection, sanction, and supervisory divisions could weaken information access and response capabilities, and there were significant internal grievances regarding the allocation of personnel and budget.

Amidst this opposition, the FSS abandoned the organizational division and opted to elevate the status of consumer protection functions by placing them directly under the Governor. The intention is to prioritize consumer protection without dividing the organization.

This restructuring is also interpreted as a measure aligned with President Yoon Suk-yeol's policy direction, which has emphasized strengthening consumer protection in the financial sector and among regulatory authorities. The Presidential Office has recently urged the entire financial industry to prioritize consumer protection.

However, some argue that it is premature to definitively assess the effectiveness based solely on an enhanced status.

It remains unclear whether the Consumer Protection Headquarters will function as a mere inter-departmental coordination body or as a control tower that actively intervenes in inspection and sanction processes.

The lack of clarity regarding its enforcement powers, such as the authority to order inspections or initiate sanction procedures, is also cited as a limitation.

Furthermore, regarding the shift towards a pre-emptive approach, specific criteria for intervention at the product design stage, and the methods of such intervention, have not been disclosed.

Metrics for evaluating performance or responsibility structures were also not included in this restructuring plan.

Within and outside the financial industry, this organizational change is viewed as the supervisory authority's response to the President's call for strengthened consumer protection, but reactions regarding its actual effectiveness remain cautious.

It is anticipated that the actual preventive and blocking capabilities of the Consumer Protection Headquarters will be gauged through future cases of actual pre-emptive action or linkages with inspections and sanctions.

By Reporter Kim Young