The Financial Supervisory Service (FSS) is intensifying its response to consumer risks associated with cyberattacks utilizing artificial intelligence (AI), the concentration of leverage exchange-traded funds (ETFs), and disorderly recruitment practices by corporate insurance agents (GAs).
On May 18, FSS Chairman Lee Chan-jin presided over the second Consumer Risk Response Council, where key issues affecting financial consumers were discussed. This council serves as the highest-level advisory body within the FSS to proactively address potential consumer harm.
The potential for cyberattacks using high-performance AI was a major topic of discussion. The FSS expressed concern that AI could quickly identify security vulnerabilities or facilitate simultaneous attacks, leading to significant consumer harm through disruptions in essential banking services. The agency plans to develop response strategies tailored to the characteristics of the financial sector in collaboration with relevant authorities and to enhance information security systems, including the use of generative AI for security purposes.
In the insurance sector, issues related to incomplete sales and disorderly practices by GAs were highlighted. Some GAs may encourage unnecessary insurance purchases under the guise of tax, accounting, or labor consulting, or may even engage in illegal private financing. The FSS is considering regulatory reforms, including prohibiting GAs from simultaneously operating consulting services and establishing mutual regulations.
In the capital markets, discussions were held regarding investor protection ahead of the launch of single-stock leverage ETFs on May 27. The FSS warned that excessive capital inflow into leverage and inverse ETFs could increase the risk of losses for individual investors and has decided to monitor trading trends and operational status closely. The agency also called for enhanced internal controls regarding securities firms' overseas stock events and investment advertisements.
Illegal activities by financial influencers and investment advisors are also under scrutiny. The FSS plans to utilize an AI-based monitoring system to crack down on the provision of illegal investment information and suspicious trading activities on social media in real time. Inspections are being considered for advisory and management firms showing significant signs of illegal activity.
Chairman Lee emphasized the need for vigilance regarding the risks and ripple effects associated with the convenience and efficiency of AI use. He stated, "We must respond with a high level of awareness to actions that encourage excessive debt investment and leverage investing, as well as to the disruptive activities of financial influencers and disorderly recruitment practices by GAs."
* This article has been translated by AI.
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