The Financial Services Commission (the “FSC”) announced on February 5, 2026 its “2026 Work Direction” and “2026 Key Tasks” (collectively, the “FSC Work Plan”) in its operations report to the National Policy Committee of the National Assembly. Meanwhile, on February 9, 2026, the Financial Supervisory Service (the “FSS”) announced its “2026 Financial Supervisory Service Work Plan” (the “FSS Work Plan,” and together with the FSC Work Plan, the “Work Plans”).
We believe it is important for financial institutions, such as banks, to review their compliance with relevant laws and regulations and assess their internal control and risk management policies based on the common key items in the regulators’ Work Plans to make necessary adjustments.
First, the FSC announced its 2026 work directions on February 5, 2026, to accelerate the three major transitions toward productive finance, inclusive finance, and trusted finance.
The key initiatives for these three major financial transitions are as follows:
|
1.
|
Productive Finance for the Future
|
A.
|
Supporting High-Tech Industries and Policy Finance: The FSC plans to focus on supplying policy financing to high-tech and promising industries, starting with the National Growth Fund, supporting data connection, utilization for AI transition and digital innovation, and the establishment of a comprehensive regulatory framework for digital assets.
|
|
B.
|
Sustainable Economy for Regional Development, Climate, and Small-Businesses: The FSC plans to gradually expand the supply of regional and climate policy financing and provide small business owners with greater access to financial support by developing a credit evaluation model tailored to small businesses.
|
|
C.
|
Strengthening Competitiveness of Financial Companies’ Productive Finance: The FSC plans to promote funds that support corporate growth by introducing business development company (BDCs) and improve policies and regulations for private equity funds. In addition, these funds will check the progress made through a consultative body for productive finance that is organized by the government and the financial sector.
|
|
D.
|
Greater Connection and Proliferation of a Vibrant Capital Market: The FSC aims to enhance trust and innovation in the KOSDAQ market, relax the capital market entry barriers for unlisted companies and small and medium enterprises (“SMEs”), and provide greater incentives to invest in the Korean market by through tax benefits and disclosure statements in English.
|
|
|
2.
|
Inclusive Finance for All
|
A.
|
Lower Interest Rates for the Financially Marginalized: The FSC plans to establish low-interest loans for the youth and socially vulnerable groups, expand support for inclusive finance programs for debtors who faithfully implement debt-adjustment plans, and alleviate interest burdens on people who have been denied access to the financial market (e.g., delinquent borrowers and those with no income).
|
|
B.
|
Improving Bank Accessibility for Middle- and Low-Credit Borrowers: The FSC plans to establish a “credit build-up” system whereby diligent repayments under inclusive finance programs increase borrowers’ credit score, enabling entry into the mainstream financial market. The FSC will also expand funding for middle- and low-credit borrowers using bank profits and other resources.
|
|
C.
|
Support for Delinquent Borrowers’ Recovery: In order to prevent prolonged and excessive debt collection, the FSC plans to reform related programs by strengthening regulations on the sale of receivables and limit the extension of statute of limitations. The FSC will also revamp the debt-adjustment program and establish card products to support the recovery of delinquent borrowers.
|
|
D.
|
Enhancing National Financial Capacity: The FSC will provide wealth-building products tailored to younger and older generations (e.g., tax-exempt Youth Future Savings and reverse mortgages) and create a tight-knit financial ecosystem that reaches rural areas through community-based integrated support services and strengthened procedures for branch closures of financial companies.
|
|
|
3.
|
Finance Trusted by the Public
|
A.
|
Unwavering Financial Stability: The FSC will continue to focus on stabilizing household debt and monitor market risk factors such as distressed financial companies, real-estate project financing (PF) and community credit cooperatives. The FSC will also take preemptive market-stabilization measures, if necessary.
|
|
B.
|
Establishing Order in Capital Market: The FSC will strengthen policies to prevent insider trading, increase shareholder value by promoting the principle that treasury shares will, in principle, be cancelled, and strengthen public disclosures. It will also promote enactment of the Framework Act on Accounting to establish consistent accounting and public disclosure principles.
|
|
C.
|
Preventing Damage to Financial Consumers: The FSC will overhaul laws and policies to prevent incidents such as hacking from recurring, eradicate illegal private lending, voice-phishing, and money laundering, and build a preventive and remedial framework to protect financial consumers.
|
|
D.
|
Policies that Improve Everyday Life: The FSC will strengthen “everyday-life” insurance (e.g., revitalizing dementia-related insurance and trusts and introducing municipality-linked free mutual-benefit insurance) and enhance public convenience through financial service innovations such as the introduction of MyData AI Agent.
|
|
The FSS announced on February 9, 2026, that it has finalized its 2026 Work Plan, which consists of five mid- to long-term strategic objectives and 15 key initiatives.
We set out below a summary of the 15 key initiatives under the five strategic objectives:
|
1.
|
Renewal: Internal Improvements for Top-Quality Supervisory Services
|
A.
|
Enhancing Transparency and Public Interest in Supervision and Administration: The FSS will improve its inspection and sanctions processes by limiting announcements of interim inspection results, providing opportunities for self-remedies for minor violations and expanding the composition of civilian members on the sanctions review committee. In addition, the FSS plans to reform internal management policies, including strengthening public disclosure requirements.
|
|
B.
|
Enhancing Supervisory Capabilities: The FSS will pursue digital innovation in its work processes, such as integrating AI technology into its review systems for handling complaints and disputes as well as for investigating unfair trade practices, to improve efficiency. It also plans to improve accessibility for service users, for example, by making inspection and sanctions information easier to search.
|
|
|
2.
|
Trust: Building a Fair Financial Paradigm
|
A.
|
Establishing Supervisory Principle that Puts “Financial Consumer Protection” First: The FSS will reorient its consumer protection paradigm towards a proactive and prevention-focused framework and plans to strengthen consumer protection across the full life cycle of financial products (design and manufacturing, review, sales, and post-sale management).
|
|
B.
|
Strengthening ex post Protection of Consumer Rights: The FSS will improve handling of complaints and disputes by establishing criteria for referring cases to the dispute mediation committee, ahead of the new policy of requiring mediation proposals to be unilaterally binding on financial companies. In addition, it plans to overhaul dispute mediation standards to focus more on financial consumers.
|
|
C.
|
Cracking Down on Illegal and Unsound Practices: Where consumer harm is anticipated, the FSS will promptly issue consumer alerts. It will also expand thematic inspections and on-site inspections of financial companies to assess whether high-risk financial investment products are being sold properly. In addition, the FSS plans to promptly investigate and take strong enforcement actions against suspected unfair trading.
|
|
D.
|
Reviewing Areas of Vulnerability and Internal Control: The FSS will focus on reviewing products with a high risk of mis-selling. It will also review and improve the internal control and decision-making procedures, such as the independence of the boards of directors at bank holding companies and other financial groups, as well as the CEO appointment procedures to foster a sound management culture across the financial sector.
|
|
|
3.
|
Stability: Establishing a Robust Financial System
|
A.
|
Thorough Management of Risk Factors: The FSS will strengthen its monitoring of potential deterioration in asset-quality, and will support reforms to foreign exchange-related regulations to help reduce volatility in the foreign exchange market. Furthermore, it aims to enhance the soundness by continuing efforts to reduce distressed real estate project financing (PF) assets.
|
|
B.
|
Stable Management of Debt: The FSS will promote stable household debt management by encouraging compliance with aggregate household debt targets and expedite restructuring of distressed companies through rigorous enforcement of the corporate restructuring framework.
|
|
C.
|
Improve Supervisory Policy: The FSS will prudently reform capital regulations to facilitate productive finance and will overhaul the supervisory framework by focusing on key risk factors specific to each sector in the financial industry.
|
|
|
4.
|
Mutual Growth: Establishing a Collaborative Growth Ecosystem with the Public
|
A.
|
Innovating Capital Market: The FSS will strengthen the foundation of productive finance by reviewing the venture capital market and identifying areas for improvement. It will not only improve the capital market (e.g., by improving foreign investment policies), but also strengthen safeguards for innovative new products such as fractional investment and tokenized securities by establishing robust investor protection measures.
|
|
B.
|
Promoting Inclusive Finance: The FSS will promote a management culture based on inclusive finance (e.g., by establishing a comprehensive evaluation system for inclusive finance in the banking sector) and further ease financial burdens on the underprivileged and strengthen related support (e.g., by promoting mid-level interest loans for mid- to low-income borrowers).
|
|
C.
|
Eradicating Predatory Financial Practices: The FSS will bolster responses to financial crimes affecting people’s livelihoods (e.g., by establishing an interagency consultative council involving the special judicial police for such crimes). It will also expand and reorganize a center dedicated to supporting victims of illegal private lending, and strengthen early intervention against illegal debt collection to ensure effective relief for victims.
|
|
|
5.
|
Future: Building Responsible Foundation for Innovation
|
A.
|
Establishing Safe Digital Environment: The FSS will respond swiftly to cyber threats by operating an integrated control system in the financial sector at full capacity. It will also reinforce financial companies’ response by establishing the “Guidelines for Responding to Major Electronic Financial Incidents in the Financial Sector.”
|
|
B.
|
Fostering Digital Innovation and Improving Reliability of Virtual Asset Market: The FSS will create a financial AI ecosystem by issuing the “Financial AI Ethics Guidelines.” In addition, it will lay the groundwork for the growth of the data industry (e.g., by improving data integration quality at data-specialized institutions), and will move forward with Phase 2 of the virtual asset bill to protect users in the virtual asset market.
|
|
C.
|
Support Sustainable Growth: The FSS will support the financial industry’s sustainable development by refining sector-specific frameworks to promote innovation in related areas such as AI and digital assets and reviewing measures to help financial institutions manage climate risks.
|
|
According to the 2026 Work Plans outlined above, both the FSC and the FSS plan to focus on the following tasks. Therefore, it would be important for financial companies to preemptively inspect their compliance with applicable laws, regulations and guidance from financial regulators and to strengthen their internal control system in response to regulatory risks.
|
(1)
|
Increasing Venture Capital Supply and Strengthening of Productive Finance
In line with the government’s stance to strengthen productive financing, financial companies will review their plans for venture capital supply and support for SMEs and start-ups, and evaluate the impact of private equity market policies on their business to strengthen relevant internal control systems.
|
|
(2)
|
Stabilization of Household Debt and Management of Risk Factors
In order to prepare for regulatory audits focusing on household debt management and management of other risk factors (e.g., failing financial companies and vulnerabilities in the real estate PF market), it would be prudent for financial companies to check whether they are in compliance with applicable laws, regulations, and guidelines issued by financial regulators and improve their internal control systems in anticipation of such audits.
|
|
(3)
|
Customized Support for Mid- and Low-credit Borrowers and Alleviating Burden on Vulnerable Borrowers
Financial companies should prepare for the increased supply of inclusive finance products, assess their impact on risk and prudential management, and refine related tasks in response to stronger regulations on the sale of receivables and the introduction of a comprehensive evaluation system for inclusive finance.
|
|
(4)
|
Protection of Financial Consumers against Unfair Trade Practices
In order to prevent unfair trade practices and mis-selling of high-risk financial investment products, it would be necessary for financial companies to preemptively inspect compliance with applicable laws, regulations, and guidelines issued by financial regulators; strengthen relevant internal control system, etc.; and prepare for changes in complaint and dispute handling processes, such as introduction of the new policy that requires mediation proposals to be unilaterally binding on financial companies.
|
|
(5)
|
Establishment of Foundation for Innovation in Financial Industry
Financial companies will inspect and improve relevant internal control systems in line with the implementation of AI and digital asset-related laws and guidelines, while striving for future growth by fully utilizing the regulatory foundation that is being revamped for innovation in the financial industry.
|
[Korean Version]
