FSS chief prioritizes consumer protection in 1st meeting with bank CEOs
Lee Chan-jin, governor of the Financial Supervisory Service, speaks during a meeting with domestic bank CEOs at the Korea Federation of Banks building in Seoul, Thursday. Yonhap
Financial Supervisory Service (FSS) Gov. Lee Chan-jin on Thursday stressed the role of banks in safeguarding financial consumers and restoring public trust, pledging to make consumer protection the top priority in all future supervisory and inspection activities.
Lee urged the establishment of a preventive protection system to avoid a recurrence of large-scale losses, such as those from Hong Kong-tied equity-linked securities (ELS).
He also called for stronger internal controls powered by artificial intelligence (AI) to prevent incidents such as personal data breaches and employee embezzlement.
He made the remarks during a meeting with the heads of 20 domestic banks, where he discussed key challenges facing the banking sector and the direction the financial institutions should pursue. It was his first official move since taking office earlier this month.
“From now on, the FSS will place consumer protection at the forefront of all supervisory and inspection activities, making it a core and unwavering principle,” he said. “Banks can achieve sustainable growth only when financial consumers are their trusted partners. Therefore, incidents of massive consumer rights violations, such as the mis-selling of ELS products, must never be repeated.”
ELS products are structured financial instruments with returns tied to the performance of a specific stock or stock index.
Banks have come under fire for selling large volumes of high-risk ELS products linked to the Hang Seng China Enterprises Index in Hong Kong without providing sufficient explanations to buyers, leading to heavy investor losses amid heightened U.S.-China tensions and global interest rate hikes.
The process of penalizing banks involved in the mis-selling of ELS products is still underway.
A meeting between Financial Supervisory Service Gov. Lee Chan-jin and domestic bank CEOs takes place at the Korea Federation of Banks building in Seoul, Thursday. Yonhap
The head of the country’s financial watchdog also warned that incidents such as data breaches and employee embezzlement can severely undermine public trust in banks. He urged lenders to treat internal controls as a strategic investment in credibility and to strengthen them using AI and other advanced technologies.
On the expansion of “productive finance,” as emphasized by President Lee Jae Myung, the FSS governor stressed the need to move beyond collateral- and guarantee-based lending and direct funds toward future growth sectors such as AI and emerging industries.
He also called for expanding financial support for small businesses and the self-employed, describing them as the foundation of the economy and a key driver of employment and innovation. In particular, he urged banks to facilitate smooth loan extensions for borrowers affected by the COVID-19 pandemic while ensuring their interest costs do not increase.
He highlighted that a bank’s competitive edge lies not in mere cost-cutting, but in developing sustainable revenue models and strengthening innovation capabilities.
“Banks should use AI and other technologies to offer highly personalized financial services, broaden access and pursue new revenue opportunities through overseas initiatives, including infrastructure and ESG (environmental, social and governance) finance in partnership with local firms,” he said. “At the same time, banks should continue to advance IT-related innovation in areas such as blockchain, cloud and cybersecurity.”
In response, participating bank CEOs pledged to actively enhance consumer safeguards, improve internal control systems and increase financing for emerging sectors, while also recommending further regulatory relief and expanded supervisory support.