'Card firms are being overregulated'
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Kim Keun-soo, chairman of the Credit Finance Association (CFA)
By Na Jeong-ju
Kim Keun-soo, chairman of the Credit Finance Association (CFA), the lobby for credit card issuers and consumer financing firms, believes the government’s regulations are a double-edged sword.
“We have to think about the reason why the government regulates firms. Regulations are necessary to secure financial stability at firms and prevent irregularities,” Kim said in a phone interview.
“However, there are too many ‘unnecessary’ regulations that hinder firms from starting new businesses and readjusting to changing market trends. This is what I’m focusing on.”
Since being named as the CFA head on June 5, Kim, a former finance official, has actively engaged in talks with government officials to ease regulations for CFA members.
“Finding new revenue sources are the biggest challenge for both card firms and consumer financiers. All types of financial firms are having a hard time these days, but their losses are not as big as CFA members,” he said. “Many firms will become financially marginalized soon if this problem is not properly addressed.”
Indeed, it’s a big challenge for Kim to lead the lobby group at a time when the financial industry is facing a dismal earnings outlook.
The combined net profits of Korean card issuers shrank to 1.3 trillion won last year from 2.7 trillion won in 2010. This year, their income is expected to drop further to less than 1 trillion won.
Kim claims card firms are in dire straits because of being overregulated. The recent enforcement of stricter rules on loans to cardholders, one of the major income sources for card firms, is hitting them hard.
They also recently had to abolish commission charges for cash advances and lower fees for merchants using the card payment system under the strict guidelines set by regulators.
“The government considers card firms as the main cause of growing household debt. Irregularities committed by card firms are reported in a sensational way. That’s a big threat to the card industry,” an industry source said.
Kim asserted that it’s time for the government to “leave the market to function for itself” by removing unnecessary regulations.
“We tend to underestimate the positive roles card firms and consumer financiers are playing for job creation and economic growth. They are an integral part of our economy,” Kim said.
Kim, 55, worked at the now-defunct Presidential Council on Nation Branding as the project manager and served as secretary general of the Organizing Committee for the 2012 Expo in Yeosu before being named as the CFA chairman.