Big tech affiliates, including those of Toss, and fintech companies will now be subject to financial conglomerate regulations imposed by South Korea's financial authorities.
The Financial Services Commission approved an amendment to its supervisory regulation on financial conglomerates at its 14th regular meeting Friday.
The core of the amendment is to include all electronic financial service providers as member financial companies under the financial conglomerate act, bringing them within the scope of group-level risk management.
Fintech and big tech companies have steadily expanded their influence in the financial market by entering licensed financial businesses alongside electronic financial services, leveraging their platform-based operations.
This raised concerns that operational risks could spread to affiliates and amplify market volatility. Some electronic financial service providers, however, fell outside the definition of member financial companies under the financial conglomerate act, leaving them excluded from group-level internal controls and risk management requirements.
Through the regulation revision, the FSC brought electronic financial service providers not classified under "financial and insurance activities" in the Korea Standard Industry Classification into the same category as those that are, making both equally subject to the financial conglomerate act as member financial companies.
"We expect the effectiveness of group-level internal controls and risk management to improve, and for the sound management of financial conglomerates and the protection of financial consumers to be enhanced," an FSC official said. "We plan to continuously upgrade the regulatory framework for financial conglomerates in response to the changing market environment."
The FSC also designated KB Financial and nine other banks and bank holding companies as systemically important banks, bank holding companies and financial institutions for 2027.
hyuk@heraldcorp.com
