Financial groups move to strengthen consumer protection in line with government policy

Lee Eog-weon, center, chairman of the Financial Services Commission, applauds alongside heads of financial holding companies during their meeting at the Korea Federation of Banks building in Seoul, Sept. 15. Yonhap

Financial holding companies are moving quickly to revamp their systems to bolster consumer protections, in line with the Lee Jae Myung administration’s push for a more consumer-centric financial sector, industry officials said Monday.

By placing consumer protection at the core of their group strategies, the companies aim to reduce regulatory risks while strengthening trust with authorities, they said.

KB Financial Group recently introduced a new consumer protection framework built around three core principles — consumer rights, accountability and trust. The framework combines the U.K. Financial Conduct Authority’s (FCA) consumer standards with KB Financial’s customer-focused philosophy and field experience.

Under the framework, the group will prioritize consumer protection across the entire lifecycle of financial products and services, from development and planning to sales and aftercare.

It also plans to expand access to dedicated services for financially vulnerable customers and reinforce its fraud prevention capabilities by developing an artificial intelligence-powered damage analysis model.

“We have been seeking fundamental reforms to better protect consumers, and the newly established framework is significant in that it reflects the broader trend toward consumer-centric practices,” a KB Financial official said. “We will work to further embed this framework while continuously improving our policies and organizational culture.”

Woori Financial Group convened its group consumer protection council last Thursday, headed by Chairman Yim Jong-yong. The group decided to require board approval for the appointment and dismissal of its chief consumer officer (CCO), while guaranteeing a minimum two-year term, as part of efforts to strengthen consumer protection governance.

Woori also plans to create a dedicated financial fraud prevention unit, eliminate the mis-selling of high-risk investment products and redesign its compensation system to prioritize consumer interests over short-term performance goals.

“Protecting consumers is the foremost value for Woori Financial’s sustainable growth,” Yim said. “It should serve not just as an internal control mechanism, but as the group’s overarching management direction and ultimate objective.”

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Shinhan Financial Group, which became the first financial holding company to establish an independent consumer protection division in July 2023, has also institutionalized a consumer protection committee composed of CCOs from all its affiliates

Shinhan Bank, a major affiliate of the group, has reorganized its consumer protection function into eight specialized teams and revised its framework to require that consumer protection goals be included in executive performance reviews.

In June, Hana Financial Group secured the industry’s first patent for an investment product risk management system. The system identifies potential risks early during the design and sales stages and provides real-time monitoring of irregularities after products are sold.