The Financial Services Commission presented its work progress and policy agendas going forward in a government work report session jointly held with the Korea Fair Trade Commission on December 19 under the theme of “pursuing a sweeping overhaul of finance, fostering a fair economy, and building robust foundations to propel a great takeoff of the economy.”

At the work report session, Chairman Lee Eog-weon of the Financial Services Commission presented progress and achievements in 2025 and key policy agendas going forward focusing on the vision to seek a sweeping overhaul of finance to make the financial industry more productive, more inclusive, and more reliable. With the pursuit of major transformation in the financial industry, Chairman Lee pledged to help propel a great takeoff of the Korean economy.

Achievements in 2025

In the past six months, the FSC has worked relentlessly to help resolve the difficulties in people’s livelihoods and to build a new framework for financial policies.

First, in order to quickly facilitate a recovery in people’s livelihoods, which had faced challenges from the COVID-19 pandemic and high interest rates, the FSC took bold steps in providing strong support measures. The establishment of New Leap Fund (Oct. 1) allowed the acquisition, screening, and cancellation of long-term overdue personal debts for 1.13 million individuals without even having these debtors needing to apply for this support. With the provision of credit recovery support in the form of expungement of overdue debt history (Sep. 30), 2.862 million individuals (as of end-Nov.) were able to make a recovery and regain footing financially. The FSC also held meetings with small merchants in twelve different occasions to more closely listen to their needs on the ground and introduced a special financing support plan in the size of KRW10 trillion-plus.

Next, the FSC sought to actively manage household debt and contain tariff-related risks in the market, while making all-out efforts to establish a fair and orderly market. The strengthened household debt management measures (Jun. 27) prevented speculative homebuyers from having access to loans, which helped to effectively control the pace of household debt growth. Concerted efforts shown by policy financial institutions and private financial companies helped to assist (Sep. 3) domestic companies in the wake of tariff challenges. A joint response team was launched (Jul. 30) to stamp out stock market manipulation, and the authorities have tightened the criteria for imposing penalty surcharges and have begun to operate an individual-based market surveillance system with the goal of preventing unfair trading activities under the “one strike out” principle.

Lastly, the FSC has begun the preparation to push for innovation in the financial industry. National Growth Fund in the amount of KRW150 trillion was set up (Sep. 10) to effectively respond to global competition over high-tech industries. There have been measures put forward by the FSC to promote a well-balanced development across different regions (Oct. 22), improve banks’ capital regulation (risk-weighted assets) to channel more supply of funds to productive sectors (Sep. 19), and authorize the entry of IMA (investment management account) operators while making them subject to the duty of supplying venture capital in the market (Nov. 19). In response to these measures, financial institutions in the private sector announced their own plans to supply KRW603 trillion-plus for the next five years, and the benchmark KOSPI reached a 4,000 mark for the first time in history.

Next year, the FSC will start to more rigorously pursue financial reform agendas to make the financial industry more productive, inclusive, and reliable to push for a sweeping overhaul of finance to propel a great takeoff of the Korean economy.

Key Policy Agendas

I. Productive Finance

Since the foundations have now been established to push for a sweeping transition toward productive finance, the FSC will seek to bring about tangible outcomes.

a) First megaproject investments to be made with National Growth Fund

National Growth Fund will begin to supply funding support worth KRW150 trillion for the next five years, KRW30 trillion every year from 2026. The fund has selected seven key megaproject investment targets in the artificial intelligence (AI), semiconductor, and secondary battery sectors, with the potential to have significant ripple effects throughout industries and across regions. Meanwhile, there will be efforts to improve the function of policy finance (public sector guarantee) to boost the efficiency of providing assistance to these industries and to pursue an AI transformation in the financial industry.

b) Bolster efforts for regional finance, carbon reduction, and small merchant finance

For strengthening regional finance, policy financial institutions will expand the supply of financing allocated to the regions outside the Seoul metropolitan area (from 40 percent in 2025 to 45 percent in 2028) and seek regulatory improvements to promote and incentivize regional finance. On climate finance, the supply of policy financing will be increased gradually, and ESG disclosure standards and a roadmap will be prepared to actively meet the nationally determined contribution (NDC) goal for 2035. Moreover, there will be measures to bring about improvements to the overall financing system for small merchants by developing a small merchant-tailored credit evaluation model and an integrated information platform fit to meet the needs of small merchants and by promoting supply chain financing.

c) Seek public-private partnership to promote productive finance

The current financial system characterized by heavy concentration on real estate, the Seoul metropolitan area, and loan-based operations will shift to an enterprise-focused, regionally balanced, and investment-oriented operations. Banks will find their traditional role as the provider of capital for companies, and securities firms will grow into true investment banks supplying venture capital in the market. To make this happen, the government and the financial industry will set up a joint public-private consultation body to regularly meet to check progress and take bold steps in reforming regulations to help strengthen the competitiveness of domestic financial companies.

d) Ride the momentum of KOSPI 4,000 to propel other areas of capital markets

First, the FSC will introduce measures to boost confidence and innovation in the KOSDAQ market. Through STO (security token offering), venture capital trading platform, and electronic registry for unlisted stocks, the capital market reform measures will aim to expand the supply of growth capital for startups, venture businesses, and SMEs. In the meantime, there will also be measures to boost incentives for domestic and foreign investors to trade and make investments in domestic stock markets.

II. Inclusive Finance

Following the emergency support provided this year in the form of long-term overdue debt write-off and credit recovery support, the FSC will seek to tackle more structural problems, such as the problem of high interest burden placed on financially marginalized individuals and the issue of persistent and excessive debt collection practices.

a) Provide microfinance products at low interest rates (3~6%)

- Introduce a microcredit product for young adults (4.5%, KRW5 million) to help them with early career setup costs.

- Launch a living expense loan for vulnerable groups (4.5%, KRW5 million) to assist basic income recipients, low income earners, and those who had been exposed to the danger of illegal private lending.

- Increase the amount of microloans made available for those who have faithfully completed a debt workout process (3~4%, KRW15 million) by more than tripling the amount of supply from the current level of KRW120 billion a year to KRW420 billion a year and broadening the base of eligible groups from CCRS (Credit Counseling and Recovery Service) debt workout recipients only to those who have completed debt workout with their own creditor financial institutions.

- Significantly reduce the burden of interest payment for those on the anti-illegal private lending loan program (designed to prevent borrowers from turning to illegal private lenders) by lowering the actual interest burden from 15.9 percent previously to 6.3 percent or 5 percent depending on one’s qualifications.

b) Bolster microfinance services offered by financial companies to boost access to mainstream finance for mid-to-low credit holders

A credit buildup program will be introduced where mid-to-low credit holders will first have access to policy-based microloan programs (anti-illegal private lending loan program and living expense loan program for vulnerable groups) and then gradually gain the eligibility to have access to mainstream finance (“bridge loan (credit loan)” from the banking sector). Along this line, the microfinance role of financial companies will be strengthened by expanding their provision of mid-range interest rate loans and microfinance contribution levels. In addition, the use of alternative credit scoring will be expanded to facilitate thin-filers to build personal credit history.

c) Root out persistent and excessive debt collection practices

First, there will be measures (through disclosures and evaluations) to encourage and incentivize financial companies to provide debt workout programs on their own. The eligibility for the special debt workout program made available by the Credit Counseling and Recovery Service (CCRS) will be expanded to make the debt restructuring system more effective and help to prevent long-term debt delinquency. Along this line, other regulatory efforts will be made to stamp out excessive debt collection practices from taking place over an extended period. Lastly, there will be measures to assist vulnerable groups to make a quick turnaround from economic difficulties by introducing a debit card with a “pay later” transportation fare option for low-credit holders and a microloan card for small merchants with mid-to-low credit background.

d) Facilitate asset accumulation for youth and elderly and promote well-balanced regional finance measures

There will be a non-taxable youth future savings program (Jun. 2026) to assist young adults build up assets, while making improvements to the reverse mortgage system to help provide the elderly with the stability of retirement income. Moreover, the provision of life stage-tailored financial education programs and financial counseling services for young adults will be expanded to help strengthen the financial literacy and capacity of the public for each life stage. There will be sensible measures to effectively address the issue of regional branch closures and to support locally based cooperatives to pursue a well-balanced regional finance policy.

III. Reliable Finance

Ensuring financial stability, fostering an orderly market, and providing protections for consumers are key areas of financial policy. Thus, there will be consistent policies in these areas to make sure a reliable finance for the public.

a) Steadily manage household debt and ensure financial market stability

Household debt will continue to be managed consistently with various mechanisms, such as the overall quantitative control, the household credit management system based on debt service ratio (DSR), and the strengthening of oversight on high value mortgages. Various market risks will be closely monitored and market stabilization tools will be employed preemptively when it becomes necessary.

b) Establish an orderly market where fairness and transparency are guaranteed

There will be strengthened measures to prevent unfair transactions by company insiders. The joint response team on stock market manipulation will be made to operate on a permanent and ongoing basis, and the fairness and transparency of sanctions will be improved to make the “one strike out” policy more effective for stock market manipulation. In addition, there will be regulatory reforms on treasury shares, mergers and acquisitions (M&As), IPOs of split off subsidiaries, and disclosures, as well as an upgrade to the stewardship code to establish fairness in shareholder protections.

c) Prepare rules and mechanisms to prevent cybersecurity accidents and damages for consumers

There will be efforts to introduce a new legislation on digital finance safety to prevent hacking and information breaches. With the introduction of punitive fines and by having joint cybersecurity drills in the financial sector, a tightly sealed and thorough cybersecurity system will be established. In addition, there will be a comprehensive one-stop support system to help the victims of illegal private lending. Under this program, victims of illegal private lending will be able to receive a variety of support by simply filing a report, including suspension of debt collection activities, debtor assistance with legal representation, suspension of account activities, investigation, etc. By blocking the phone numbers suspected to have been used in illegal debt collection activities and freezing the activities on suspicious accounts, the potential for further damages will be prevented. Moreover, there will be continuous efforts to stamp out voice phishing (vishing) scams by seeking to legally make financial companies liable for victim compensation and making continuous upgrades to the AI-based Anti-phishing Sharing and Analysis platform (ASAP). Additionally, there will be measures to bolster consumer safeguards focusing on the actual needs of consumers.

d) Continue to seek, implement, and promote policies aligned with public needs

First, in order to more effectively manage dormant assets associated with dementia, which are estimated to be about KRW172 trillion (as of end-2025), there will be efforts to promote the use of trust and dementia-related insurance plans. For life insurance policyholders, the death benefit conversion program allowing them to receive death benefits in the form of retirement income will be expanded to include service-type benefits, such as health care treatments and long-term care services. Additionally, there will be constant efforts to promote financial innovation that can help to bring about improvements to the daily life of financial consumers (e.g. introduce an AI agent for financial MyData services, lower the minimum user age for payment cards, and upgrade regulations on electronic financial services to unleash more innovation in payment services).

The FSC will make sure to closely engage with the public and work to bring about prompt and tangible outcomes to make financial services better serve the needs of the public.

* Please refer to the attached PDF for details.