South Korea's Financial Services Commission (FSC) postponed its financial holding company governance reform announcement originally planned for this month to prioritize real estate financial policies, focusing on completing policy measures by next week. FSC Chairman Lee Eok-won canceled his vacation and weekend rest to concentrate on real estate policy development. The decision reflects the regulator's judgment that real estate financial policy, closely tied to public welfare, requires more urgent attention than governance reforms, with the comprehensive real estate package expected at the end of this month. The government held three discussion forums on supply, financial regulation, and taxation, followed by a presidential forum on July 23 where President Lee Jae-myung reviewed loan regulation issues.
FSC Chairman Cancels Vacation to Focus on Real Estate Policy Deadline
FSC Chairman Lee Eok-won canceled his vacation, originally scheduled to coincide with the president's overseas tour, and skipped weekend rest to conduct in-depth reviews of real estate policy. The FSC announced through its work report that it would release financial company governance improvements this month, but decided to make the announcement timing flexible based on the assessment that real estate financial policy is more urgent. Financial authorities judged that the governance reform announcement can be addressed after the comprehensive real estate measures expected at the end of this month. The FSC is concentrating its capacity on preparing real estate-related financial policies by next week.
President Lee Directs Loan Regulation Adjustments at July 23 Forum
President Lee Jae-myung chaired a major discussion forum on the previous day (July 23) to hear opinions on real estate policy. At the financial regulation forum, opinions clashed on four topics: youth loans, jeonse loans, relocation expense loans, and aggregate regulation. When asked whether exceptions could apply to borrowers who contracted two years ago but cannot receive balance payments due to aggregate regulation, President Lee said "there is merit to that." The president also expressed agreement with "loan restructuring" that applies regulations equally to existing borrowers, not just new borrowers of mortgage loans.
President Lee stated that the government will maintain a policy stance of suppressing speculative demand and continuing fund supply centered on actual demand. He said, "In the past, real estate was regarded as an investment and speculation tool to make money, but now the aspect of a comfortable home is emphasized much more than an investment tool." Regarding jeonse loans, the president noted, "There is an aspect of being a support policy for housing stability of ordinary people, but it has also become a main cause of soaring housing prices, so it seems time to adjust," pointing out that "regulations on jeonse loans should be strengthened." He added, "We must provide support with specific feasibility for absolutely necessary youth, newlyweds, and first-time jeonse loan borrowers."
The plan to impose separate macroprudential management charges on high-value housing or high-amount mortgage borrowers was among the announced content, so it can be included in the FSC's review targets. The regulator faces the task of continuing aggregate regulation while minimizing damage to actual demand borrowers and incorporating this into policy.
Governance Reform to Include CEO Term Limits in Future Announcement
The governance improvement plan is expected to include content such as legislating a three-term limit for financial holding chairmen. The FSC stated through its second-half work report that it would improve fairness and transparency of governance by fundamentally blocking CEO entrenchment in boards of directors and improving reappointment procedures. The direction also includes strengthening the role of institutional investors and increasing the operational rationality of performance-based compensation. A financial authority official said, "Until we finish the real estate policy tasks first, it is difficult to do other things before that."
FAQ
What did South Korea's FSC postpone this month?
The Financial Services Commission postponed its financial holding company governance reform announcement originally planned for this month to prioritize real estate financial policies, with the regulator focusing on completing policy measures by next week.
What did President Lee Jae-myung say about loan regulations at the July 23 forum?
At the July 23 forum, President Lee said there is merit to applying exceptions for borrowers who contracted two years ago but face aggregate regulation barriers, expressed agreement with loan restructuring that applies regulations equally to existing and new borrowers, and directed strengthening jeonse loan regulations while supporting youth, newlyweds, and first-time borrowers with specific feasibility.
