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Financial Services Commission (FSC) Chairman Lee Eog-weon delivers remarks during a press conference held at the Government Complex Seoul on May 21. / Photo by Reporter Lee Seon-yeong

The Financial Services Commission (FSC) will launch a "Task Force for Financial Inclusion Strategy" next month, embarking on a fundamental redesign of the financial system. The initiative aims to embed financial inclusion across the corporate governance and evaluation systems of financial institutions. As part of this plan, the regulatory body is considering a measure to require financial firms to appoint a "Chief Financial Inclusion Officer (CIFO)."

During a press conference held at the Government Complex Seoul on May 21, FSC Chairman Lee Eog-weon stated, "We intend to form a Task Force for Financial Inclusion Strategy under the ongoing Council for Great Transition to Financial Inclusion to seek fundamental improvement measures." He added, "This will serve as a strategic platform to fundamentally restructure our financial system into an inclusive one."

The FSC plans to operate the task force across four subcommittees: General Coordination, Public Policy Finance, Financial Industry, and Credit Infrastructure. The General Coordination subcommittee will discuss methods to integrate financial inclusion into the core operations of the financial system.

"We will explore ways to designate a Chief Financial Inclusion Officer (CIFO) within financial institutions and internalize a system where the board of directors can systematically oversee these matters from a governance perspective," Chairman Lee explained. "We are also considering immunity protocols for executives and employees who actively promote financial inclusion."

The Public Policy Finance subcommittee will review the state-backed microfinance framework, while the Financial Industry subcommittee examines the rationalization of prudential regulations. The Credit Infrastructure subcommittee will discuss measures to improve the current credit evaluation system, which remains heavily reliant on past performance data.

Chairman Lee particularly pointed out that the current financial system is structured primarily around high-credit borrowers. He noted that because banks selectively choose only prime borrowers, individuals excluded from institutional finance are being pushed into high-interest markets.

He further mentioned that the financial safety net must consist of three distinct tiers. "The first tier should be institutional finance, the second tier policy-based microfinance institutions, and the third tier rehabilitation finance," Lee said. "The first tier needs to play a substantial role, but because it fails to do so, people are moving up to the second tier, causing an influx that overwhelms its capacity as well."

He criticized the current trend, stating, "The fundamental role of a financial institution is to screen risks, discern a borrower's future potential, and manage and measure those factors. However, because they gravitate toward the easiest and safest options, this structure has become rigid. Consequently, the threshold of finance remains high, and the financial economy is severely narrowing."

The FSC also plans to transition the debt buying and collection business, which purchases long-term delinquent bonds at deep discounts for aggressive collection, into a licensing system. Chairman Lee explained, "Since the debt buying and collection business inherently generates profit by purchasing delinquent bonds cheaply from financial firms and collecting them, it strictly requires rigorous regulation due to the very nature of the industry."

Furthermore, the regulator will conduct a comprehensive survey to ensure no blind spots exist within the New Leap Fund. "We will pay close attention to delinquent bonds held by public institutions and review institutional improvement measures," Lee said.

To enhance the structural robustness of the capital market, Chairman Lee announced plans to prepare a global investor relations (IR) event in September. "We will systematically integrate and coordinate fragmented and overlapping events to create a signature international event that immediately represents the Korean capital market," he stated. "We will also concurrently pursue overseas IR activities in the fourth quarter to attract promising global enterprises to list on the KOSDAQ."

                                                                                                          Lee Seon-yeong