Cho Seong-mok, the newly appointed head of the Korea Microfinance Research Institute, said Monday that he would become "a vanguard for financial consumer protection beyond microfinance."
His vision is to expand the role of microfinance — previously limited to supporting vulnerable groups — across the broader spectrum of financial consumer protection, while strengthening safeguards against illegal private lending and financial fraud.
"Korea is virtually the only country on earth that uses the term 'seomin geumyung' (microfinance for ordinary citizens), which shows how narrowly the concept has been defined," Cho said in a phone interview with the Seoul Economic Daily. "We need to strengthen consumer protection across financial companies, including support for ordinary citizens, within a larger framework."
Cho pointed out that systems such as the right to request interest rate reductions need to be more actively utilized. "If banks profit from borrowers who faithfully repay interest, they should give vulnerable borrowers whose repayment capacity has collapsed a chance to recover through bold debt restructuring," he said. "In many cases now, responses remain superficial, driven by awareness of regulatory sanctions."
Cho said he would actively engage with financial companies to strengthen consumer protection. While serving at the Financial Supervisory Service (FSS), he led the enactment of the Act on the Establishment of the Dormant Deposits Management Foundation in 2007 to channel dormant bank deposits toward supporting ordinary citizens.
"Financial companies opposed it at the time, but we succeeded in enacting the law through persistent persuasion," Cho said. "Even now, there is a lot of unclaimed money in bank safe deposit boxes, and it should be used for people in need. I will work to present reasonable solutions that create a win-win between financial institutions and their customers."
Cho also stressed his determination to eradicate illegal private lending. In 2001, he headed the FSS's illegal private lending damage response task force and led the establishment of a counseling center for victims of illegal private lending. In 2017, he founded the Korea Microfinance Research Institute and served as its inaugural head.
"The worse the economy gets, the bigger the loan shark market grows, and the more easily people in difficult circumstances fall into private lending traps," he said. "As the first person in Korea to provide counseling for victims of illegal private lending, I felt that now is the time when real countermeasures are truly needed," he said, explaining the background of his return.
"Current microfinance policy is reactive — like prescribing medicine after the illness has set in," Cho said. "We must strengthen preventive functions so that ordinary citizens do not fall into ruin." He added, "Even now, there are systems that allow ordinary citizens to legally settle their debts, but many turn to high-interest illegal loans simply because they don't know about them. I will work hard to raise awareness of microfinance policies."
As a key priority, Cho cited prevention of voice phishing and financial fraud. "I will build effective prevention models to protect the precious assets of ordinary citizens from increasingly sophisticated voice phishing and financial fraud," he said.
