FSS: 'Interest Rates Are the Most Immediate Risk... Closely Monitoring Financial Burden'

The Financial Supervisory Service (FSS) stated on September 17 that it views interest rates as the most immediate risk factor in the financial markets, adding that it is closely monitoring the resulting increase in the public's financial burden.

Lee Se-hoon, Senior Deputy Governor of the FSS, met with reporters during a pre-briefing for the "National Report on Financial Consumer Protection Achievements," saying, "The pace of interest rate hikes is steep." He added, "We are paying very close attention to how this not only affects market stability but also increases the financial burden on the general public."

As part of efforts to ease consumers' interest burdens, he explained, "We are considering debt restructuring, vitalizing the right to request lower interest rates, and expanding fixed-rate loans."

Regarding the background behind household loans growing at a steeper rate this year compared to last year, he pointed out, "The surge in the stock market during the first half of the year likely influenced the demand for stock investment funds." He also noted, "We must consider the base effect, given that last year authorities managed household loans at an unprecedentedly tight level."

He added, "Since we have established a management target of a 3 percent growth rate for total household debt this year, we judge that this is not an excessive increase in loans considering nominal economic growth." However, he noted, "We will closely monitor the situation through December to see if there are any aspects of our management targets that need to be supplemented."

Regarding the ongoing inspection of exchange-traded fund (ETF) trust fees in the banking sector, he stated that the FSS is focusing on whether consumers received sufficient information and whether they made voluntary choices accordingly.

Authorities believe that even though short-term trading accounts for an overwhelming proportion of all ETF transactions, banks have increased consumer burdens by charging upfront fees that are disadvantageous for short-term trading to their customers.

He explained, "Another item for future inspection is whether this can be seen as intentional solicitation to maximize financial company profits, or if holding periods became shorter simply because profits were realized quickly."

In addition, he noted that if authorities respond only after damages accumulate and large-scale complaints and disputes arise, the damage could grow larger. He evaluated that the FSS was able to preemptively detect the issue and prevent further spread of damage.

Regarding the FSS's Judicial Police (Special Judicial Police), he stated that preparations are underway to make adjustments in line with the ongoing reorganization of the national investigation system.

Previously, the Special Judicial Police received investigative direction from prosecutors, but with the abolition of the Prosecutors' Office and the launch of the Serious Crimes Investigation Agency and the Prosecution Service next month, the relationship between the two will change to "mutual cooperation."

Senior Deputy Governor Lee explained, "There are still many details to coordinate. Previously, the system went from the Special Judicial Police to the prosecutors, but after the launch of the Serious Crimes Investigation Agency, additional consultations are needed on how to divide roles between the agency and the Special Judicial Police, and how to handle the investigation procedures for the Special Judicial Police."

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.