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| Financial Supervisory Service Governor Jeong Eun-bo, right, replies to questions from lawmakers during a National Assembly audit in Seoul, Thursday. Joint Press Corps |
By Park Jae-hyuk
Financial Supervisory Service (FSS) Governor Jeong Eun-bo expressed his intention to impose tougher regulations on Naver, Kakao and other large tech firms in the financial sector, Thursday, in line with the government's ongoing attempts to tighten controls on the country's online platform operators.
This was his first direct mention of regulations on big tech firms.
"Following big tech firms' accelerated entries into the financial sector, we will regulate their operations and come up with reasonable supervisory measures to enable fair competition between digital platform providers and financial companies," he said at his first National Assembly audit following his appointment to head the ministry in August.
Given that Financial Services Commission (FSC) Chairman Koh Seung-beom also emphasized the principle of equal regulations for tech firms in Wednesday's National Assembly audit, Naver and Kakao are expected to face intensified restrictions when offering financial services.
Koh said a day earlier that financial authorities will continue checking whether big tech firms in the financial sector have a negative impact on competition, stability and consumer protection, although he acknowledged the growing importance of financial innovation.
On a related note, Jeong said he will ask KakaoBank to upgrade its computer system, after Rep. Yun Ju-keyng of the main opposition People Power Party (PPP) criticized the internet-only bank for citing its system as the reason for refusing to increase the size of loans extended to customers.
The FSS governor also agreed with PPP Rep. Kang Min-kuk's concern about the potential side-effects of the financial watchdog's plan to force banks to use only KakaoTalk when they send advertising messages to consumers.
The plan was first proposed in July's meeting of the FSS, banks, mobile carriers and government ministries, in order to prevent scammers impersonating financial firms from sending fraudulent text messages.
Kang raised questions about the plan, citing FSS data showing that eight out of 10 messenger scams here were done over KakaoTalk between 2018 and 2020.
"KakaoTalk can be the main target of fraud, increasing the possibility of phishing scams," the lawmaker said.
The FSS governor answered that he will reconsider the plan and look for an alternative, admitting the possible side-effects.
He was also urged by Rep. Lee Yong-woo of the ruling Democratic Party of Korea (DPK) to ask the Securities and Futures Commission to sanction Naver founder Lee Hae-jin for violating the Capital Markets Act, when the IT firm and Mirae Asset Securities swapped their stocks in 2017.
The lawmaker claimed that the Naver founder neglected his duty to disclose his holding of a stake larger than 5 percent in his company, even though the deal led him to have joint ownership with Mirae Asset of a 1.71 percent stake in Naver, in addition to a 3.73 percent stake he had already owned.
Although the FSS governor said he will review this matter carefully, he defended the Naver founder, citing an opinion sent from the Korea Legal Aid Corp. in November 2017. Back then, the state-run legal adviser declared that Mirae Asset is the sole owner of the swapped Naver share.
The FSC chief gave the same answer in Wednesday's audit.
Separately, Jeong apologized for the belated countermeasures against the operator of Mergepoint, an electronic payment service which abruptly blocked customers from using their pre-paid coupons at its affiliated stores in August, triggering a fiasco similar to a bank run.
He was also asked about the FSS's plan to regulate non-fungible tokens (NFTs) that have yet to be categorized as virtual assets in Korea. He said the financial watchdog will talk with the Financial Intelligence Unit, the Ministry of Science and ICT and the Ministry of Culture, Sports and Tourism regarding this matter and will monitor global trends to close regulatory loopholes.
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