South Korea regulator Lee Chan-jin warns of soaring household leverage and sparks debate over regulatory scope

Financial Supervisory Service chief Lee Chan-jin has sparked controversy by suggesting that the debt‑service‑ratio (DSR) framework should be extended to cover non‑financial companies’ internal loans, a move critics say exceeds his authority and was made without coordination with the Financial Services Commission. The remarks have also raised questions about potential reforms targeting bank presidents and broader governance changes in the banking sector, prompting unease among financial institutions.

Lee also warned that household leverage tied to stock‑borrowed investing has surged, with credit‑loan balances reaching 37.3 trillion won in June – a rise of about 10 trillion won from the previous year. At a consumer‑risk response council, he urged financial firms to act as risk managers for customers, curb the promotion of leveraged products, and strengthen oversight of high‑frequency short‑selling and single‑stock ETFs that could destabilise the market.