Restructuring ‘Market Fairness’
As the previous blog post(https://financialservicescommission.wordpress.com/2012/10/16/shift-in-financial-paradigm-and-fscs-responses-1/) already talked about an overview of ‘shift in financial paradigm’, this post is focusing on more details of the paradigm shift. This post particularly deals with ‘protecting financial consumers’. This issue was discussed at the FSC’s workshop held on 10th of October.
The most fundamental ground to protect financial consumers is restructuring ‘market fairness’ in financial sector. This is because market fairness will enable the financial consumers to choose the right financial product and service without being influenced by any illegal and undesirable market forces.
Restructuring and maintaining market fairness requires ‘real change and reforms’. And, that is what FSC is working for. ‘Comprehensive and systemic’ policy measures are sought by FSC.
First of all, FSC is establishing unified regulatory and reform systems to cover every area in Korean financial sector. The notable effort is Financial Customer Protection Act having been submitted to the National Assembly. This Act is so as to consolidate the legal basis of financial customer protection.
As well as having passed the Act to the National Assembly, FSC is introducing various policy measures. The recent measures, since this September, are as follows; 1) Protection Measures for ELS Investors, 2) Improvement Measures for Commercial Paper Market, and 3) Enhancing Supervisions for Overheated and Rapidly Rising Financial Products. All the measures are under the umbrella of ‘strengthening protection mechanism for financial consumers’.
Recently, FSC finds that it is necessary to regulate overwhelming transactions between affiliates within a corporation. Despite an expected synergy effect between affiliates, overwhelming trade only within a corporation might cause some problems. Financial consumers’ choices will be limited, as newly emerging market participants are threatened to enter the market. Also, systemic risk might be passed on from one affiliate to the other affiliate. Putting emphasis on this issue, FSC is planning to implement appropriate policy measures shortly. Possible measures would include direct regulation, market structure reform, and so on.
We, as an individual financial consumer, will be directly influenced by market reforms. As we all know, ‘market fairness’ cannot be built on in a few seconds. However, as long as continues efforts are put in by FSC, we can expect a progressive, improving, and ultimately ‘fair’ financial market.