FSC Korea to Conduct Post-licensing Inspections on MyData Services Providers

South Korea's FSC (Financial Services Commission) has announced that it will prohibit MyData services providers from buying and selling consumer data, and start conducting post-licensing inspections to ensure adequate protections are in place. 

Launched in January this year, MyData is an API-based government-led platform that allows consumers to manage data from different financial and non-financial institutions in one place – including information about their account balances, loans and insurance policies. The platform was designed to enable customers to make more informed financial decisions.

To date, 56 MyData service providers have been granted full licenses and 45 MyData services have been launched. The FSC says there is still demand for additional licences from small-scale financial companies and fintechs.

The FSC has taken various measures to ensure MyData services are secure, through its licensing system and requirements for applicants to be assessed by an external review committee for the adequacy of their business plans and material resources.

Currently, licence applicants with deficiencies are granted preliminary approval under the condition that they take supplementary measures to make up for inadequacies in the final licensing stage. The FSC says this process will be enhanced to require applicants to take the supplementary measures during the preliminary approval stage, and then be subject to a reassessment by the external review committee.

MyData services providers will also be explicitly prohibited from acting as data brokerages and from buying and selling consumer data. Firms that are highly likely to engage in such activities or other forms of data abuse or misuse will not be allowed to participate in the licensing process, the FSC said. "When necessary, a conditional approval may be granted with a restriction on the provision of consumer data to a third party or a prohibition on ancillary work related to the buying and selling of data," it added.

As an additional safeguard, after the licensing process the FSC will conduct periodic inspections on MyData service providers to ensure they are operating according to the personal data privacy and security mechanisms and business plans set out in the application stage. Where deficient consumer data protection mechanisms are identified, the FSC will provide consultations and, where necessary, issue corrective orders against non-compliant firms.

The measures are aimed at enhancing safeguards for consumers, ensuring trust in the market, and further promoting the growth of MyData services as a key driver of growth in the financial industry, the FSC said.

This year's first business applications for a preliminary MyData licence will open on 22 April. Further application cycles will be available at the end of every quarter thereafter.

Source: Regulation Asia