![Financial Supervisory Service Governor Lee Chan-jin. [FSS]](https://wimg.heraldcorp.com/news/cms/2026/08/13/news-p.v1.20260721.8b1eab36b2dc4477a1ae4925d00b159f_P1.jpg)
The Financial Supervisory Service will inspect banks' sales of ETF trusts this month and next, the regulator announced Wednesday. In the second half of the year, it plans to intensively investigate hospitals suspected of insurance fraud and has signaled "all-out inspections" of general insurance agencies that have repeatedly engaged in illegal sales practices. FSS Governor Lee Chan-jin, who has made consumer protection and household finance central themes of his tenure, is stepping up enforcement as he enters his second year in office.
The FSS released a summary of its key achievements over the past year and its forward plans on Thursday — one day before the first anniversary of Lee's inauguration on Friday. Consumer protection and household finance anchored the financial sector agenda, while cracking down on unfair trading dominated the capital markets side. The FSS also said it plans to conduct a comprehensive evaluation of consumer protection outcomes in the second half and make the results public.
From bank ETFs to GAs: sweeping inspections across sales channels
The FSS will examine whether banks that sold ETF trusts between August and September properly fulfilled their obligation to explain trust fees to customers. Buying an ETF through a bank differs from trading directly through a brokerage account: the investment is managed through a trust structure, making real-time trading and price specification difficult, and a separate fee applies. Buoyed by a bull market, ETF sales at the six major banks totaled 64 trillion won ($45.2 billion) from January last year through May this year, with trust fee revenue reaching 586.4 billion won over the same period. Fee revenue in May alone — 103.6 billion won — was more than 10 times the December 2025 figure of 10.2 billion won. After the inspections wrap up in September, the FSS plans to form a task force with the industry and relevant associations to revamp the fee structure, bank key performance indicators and sales procedures.
On the insurance side, the FSS previewed guidelines to control "third-party risks" posed by hospitals and auto repair shops. The regulator's concern is that parties who determine medical or repair costs can drive up unnecessary treatments or repairs for profit, with the resulting bills paid out as insurance claims and ultimately pushing premiums higher. Insurance policy terms and product disclosure documents that consumers find difficult to read will be comprehensively overhauled to focus on key information, and the scope of proxy claimants — people authorized to file insurance claims on a policyholder's behalf — will be expanded from dementia insurance to cancer, brain and cardiovascular insurance.
In addition, the FSS said it will select general insurance agencies with a track record of unlawful sales practices and subject them to all-out inspections. General insurance agencies, which bundle and sell products from multiple insurers, are currently the largest sales channel in the insurance market. Beyond applying a zero-tolerance policy to violations, the FSS plans to draw up a comprehensive supervisory framework that broadens the range of businesses GAs are prohibited from operating concurrently — such as consulting — and clarifies the standards for special benefits paid to insurance planners.
The FSS will also draft amendments to the Financial Consumer Protection Act to strengthen the responsibilities of manufacturers — insurers and banks — as well as distributors and the supervisory authority, starting from the product design stage. Rather than waiting for the legislation to pass, the regulator said it will issue guidelines on key matters and apply them immediately. It will then assess whether this preventive framework is functioning in practice before releasing a comprehensive evaluation of consumer protection outcomes in the second half.
In the household finance area, an intensive investigation of hospitals suspected of insurance fraud was flagged as a second-half priority. The FSS has been tackling insurance fraud schemes involving the use of obesity drugs as inducements and the falsification of medical records using AI. To catch illegal debt collection and violations of the maximum interest rate cap, the FSS will conduct a joint inspection this month with the Gyeonggi Province special judicial police targeting online loan brokerage sites.
The FSS is also pushing to introduce special judicial police powers for its own staff to directly investigate household finance violations. Legislation is under way to add the Moneylending Act and the Debt Collection Act to the scope of those special investigative powers, with a target implementation date of January next year. Plans for the second half also include restricting military personnel from taking out loans from moneylenders and adjusting the loan-to-deposit ratio calculation for savings banks to give favorable weight to loans made outside the greater Seoul area, with the aim of boosting capital supply to regional economies.
Special investigative powers, DART overhaul: four capital markets reform tracks
On the capital markets side, the FSS laid out plans across four areas: cracking down on unfair trading, improving the disclosure regime, reviewing asset managers' exercise of voting rights, and expanding the supply of venture capital.
The FSS said it will actively refer urgent and serious unfair trading cases to the capital markets special judicial police, enabling investigation and prosecution to be handled in a single process. For those found to have engaged in unfair trading, the regulator plans to claw back illicit profits through fines and to block stock price manipulation at the source through market-exit measures, including trading restrictions and bans on appointment to executive positions at listed companies.
The FSS will continue reforming the system to protect shareholder rights. It plans to revise disclosure forms so that the spirit of the amended Commercial Act's shareholder loyalty obligation is reflected in practice, and to keep improving the DART electronic disclosure system to enhance comparative and analytical functions for users.
The FSS also said it will continue reviewing how asset management companies exercise voting and shareholder rights, and will promote the stewardship code across the industry through a "name and shame" approach — publicly identifying both exemplary and deficient cases. It plans to hold briefing sessions for both public and private fund managers in August and September to explain inspection criteria and findings.
To expand the supply of venture capital, the FSS will support the licensing review for additional comprehensive financial investment business operators authorized to issue promissory notes, as well as the launch of a second public participation-based national growth fund. It also plans to broaden the definition of qualifying venture capital and overhaul soundness regulations for comprehensive financial investment business operators. The seven such operators currently handling integrated management accounts and promissory notes supplied 9.6 trillion won in venture capital as of the end of the first quarter this year — already above the mandatory supply ratio of 10 percent for this year. That ratio is set to rise to 20 percent in 2027 and 25 percent in 2028.
Meanwhile, over the past year the FSS reorganized its structure in January to place the consumer protection division directly under the governor, and launched a Financial Consumer Protection Advisory Committee in March. The advisory committee addressed 32 agenda items across three meetings. The number of insurance dispute complaints handled in the first half of this year reached 14,069 cases, up 24.8 percent from the second half of last year. In the capital markets, the FSS imposed sanctions following accounting audits of Young Poong and Korea Zinc, and six individuals involved in unfair trading were indicted and detained.
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