Financial authorities are pushing to grant the Financial Supervisory Service (FSS) the power to impose its dispute mediation outcomes on financial institutions, a move the banking sector warns infringes on its fundamental right to a trial.
The FSS recently reported to the National Assembly that it will actively support legislative efforts to introduce this “one-sided binding force.” Currently, a ruling by the FSS’s Dispute Mediation Committee is merely a recommendation that only takes effect if both the financial company and the consumer agree. If either party rejects it, the dispute moves to litigation.
The goal is to strengthen consumer protection and make the mediation process more effective. This push is fueled by the low acceptance rate of the FSS’s mediation plans—only 47.3% last year—with large financial companies often leveraging major law firms to prevail in court.
A bill currently before the National Assembly proposes introducing this binding power for small-amount disputes, with the FSS reviewing a threshold of 20 million won or less (approximately \$14,800 USD). Proponents cite overseas examples, like the UK, where the equivalent threshold is significantly higher at 355,000 pounds (about \$442,000 USD).
However, the financial sector is voicing strong opposition:
Erosion of Judicial Rights: Institutions argue that forcing them to accept a mediation outcome deprives them of their fundamental right to sue and defend themselves in a proper court of law.
Granting Excessive Power: Some critics allege that the proposal effectively gives the FSS the role of the judiciary, acting as both “prosecutor and judge” in financial disputes, especially since court judgments have, in many cases, overturned the FSS’s prior mediation plans.
In response to the criticism, the FSS stated that if the legislation moves forward, it plans to expand its dispute mediation-related organizations and personnel to strengthen the objectivity and fairness of the Dispute Mediation Committee.
Do you think a binding mediation process, even for small amounts, is a fair trade-off for strengthening consumer protection?
