Fintech regulation controversy ‘A Week of Destiny’
Judgment of investment brokerage rather than simple advertising agency
Registered as an agent/broker with the Financial Services Commission by the 24th
‘Octopus Feet’ Kakao Pay Car Insurance Comparison Stopped
Naver Financial Toss, business downsizing is inevitable
Financial Services Commission, “Limited to Consumer Damage”
As the financial authorities announced strict regulatory policies on financial platforms one after another, funds, loans and insurance services of big tech companies such as Kakao Pay and Naver Financial were in danger of being suspended. The end of the grace period of the Financial Consumer Protection Act (Goldso Act), which sees the recommendation of financial products by big tech companies as “illegal”, is approaching on the 24th. With the exception of Chuseok holidays, this week is expected to be a ‘week of fate’.
According to the fintech industry on the 12th, it is known that Kakao Pay, Naver Financial, and Viva Republica (Toss) are in the midst of internal discussions over whether their services should be modified or suspended in accordance with the regulatory policy of the financial authorities. These companies asked the financial authorities to extend the guidance period for the Gold Law Act, which was scheduled for the 24th, but the Financial Services Commission said, “There is no extension of the period,” with the principle of ‘same function and same regulation’.
In particular, Kakao Pay, which was aggressively expanding its business, caught fire. On the 11th, Kakao Pay decided to stop the auto insurance premium comparison service in partnership with six non-life insurance companies soon. A Kakao Pay official said, “We will do our best to resolve the concerns of the financial authorities within the period of induction of the Financial Services Act.” In particular, small investment financial services such as ‘gathering eggs’ (fund investment) together with its subsidiary, Kakao Pay Securities, are expected to be hit. Naver Financial is also expected to reduce its business in the future as government regulations are expanding in all directions. Toss is also expected to discontinue services such as personalized card recommendation rankings.
This situation occurred because the financial authorities recently judged that the product comparison and recommendation services of fintech companies were ‘investment brokerage’ rather than ‘simple advertising agency’. In order to compare and recommend financial products, Kakao Pay, etc., must register as a financial product sales agent/broker with the Financial Services Commission after the completion of the Gold Solicitation Period. The platform itself needs to acquire investment, insurance, loan, and deposit product licenses to provide services as an intermediary in the areas of insurance and loans when laws are revised. Alternatively, if it is difficult to obtain a brokerage license, measures should be taken to change the interface so that consumers can solve the problem of mistaking the financial product contract subject for the platform.
However, the financial authorities believe that consumer damage caused by the suspension of financial product comparison services by big tech companies will be limited. An official from the Financial Consumer Policy Division of the FSC said, “The core of this regulation is consumer protection for funds and insurance products that are most likely to be incompletely sold. There is only one of each, so it is difficult to say that consumer benefits will decrease with this.” Min-seop Yoon, a research fellow at the Korea Financial Consumer Protection Foundation, said, “If financial platforms do not register as brokerage businesses in the future, it is necessary to discuss the extent of the information permissible range of customized advertisements.”
Reporter Song Soo-yeon songsy@seoul.co.kr
By Yoon Yeon-jung, staff reporter yj2gaze@seoul.co.kr
