Concerns were raised by lawmakers from both ruling and opposition parties during a parliamentary audit over Toss' push to enter online investment-linked finance. They said a large financial platform could affect the competitive landscape by entering a market developed by smaller fintech firms. Some also warned that conflicts of interest could arise if Toss, which operates a loan comparison platform, supplies loan products directly, including by favoring its own products.

According to the financial sector on Oct. 10, Choi Eun-seok (최은석), a lawmaker from the People Power Party, and Min Byeong-deok (민병덕), a lawmaker from the Democratic Party, urged at the National Assembly's Political Affairs Committee audit of the Financial Services Commission that financial authorities need an institutional review of Viva Republica's push to enter online investment-linked finance.

Toss is known to be seeking to enter online investment-linked finance to expand its personal credit loan business for borrowers with mid-to-low credit scores. In response, voices within the online investment-linked finance industry also raised concerns about possible conflicts of interest and distorted competition stemming from a large financial platform entering the market.

Six online investment-linked finance firms, including MoneyMove, Mouda, HonestAI, 8Percent, PFCT and Hanpass Financial, issued a joint statement on Sept. 10 calling for pre-emptive management standards for entries by large conglomerates and large financial platforms.

Choi Eun-seok: 'Concern over free-riding on a market nurtured by startups'

Choi said authorities should examine whether it is fair competition for a large financial platform to enter the online investment-linked finance market that smaller financial startups have developed over a long period.

He said 47 online investment-linked finance firms are currently registered, and small operators with capital of 500 million won to 3.5 billion won are forming the market.

He added that startups have developed the business and grown the market through innovation over the past 12 years, and argued that the controversy over free-riding stemming from Toss' market entry should be reviewed.

He also took issue with Toss' loan brokerage fees. Choi said Toss receives 1.8 percent of the loan amount as a brokerage fee, while banks are at about 0.08 percent, and argued the gap is large.

He also called for a legal review of how it relates to financial holding company regulations by examining whether Viva Republica should be licensed as a financial holding company, as well as its governance and asset structure.

Choi cited the Financial Services Commission's announcement on Sept. 22 of measures to strengthen competitiveness in online investment-linked finance, and stressed that authorities should again review the impact of large platforms entering the market on the existing ecosystem.

Min Byeong-deok: 'Like a referee playing as a player... conflict of interest concern'

Min focused on the potential for conflicts of interest from Toss entering online investment-linked finance. He said that if Toss, which already operates a loan comparison platform, enters the business directly, it becomes an operator competing with financial companies already on the platform.

Min criticised it as someone who opened the market also releasing its own products, and said it is like a referee playing as a player.

He added that Toss could raise its own products to the top on the loan comparison screen and adjust algorithms to favor itself. He raised the possibility of conflicts of interest such as steering prime borrowers to its own online investment-linked finance products or using competitors' information.

He also stressed the need for responsibilities within the market commensurate with Toss having grown into a corporate group with many financial affiliates.

Min said referees and players should be separated, and called for institutional measures to prevent conflicts of interest between loan brokerage functions and supplying its own financial products.

Kang Il (이강일), also a Democratic Party lawmaker, voiced concerns about the possibility that competition order in the fintech market could be undermined as Toss expands its business areas.

Financial Services Commission Chairman Lee Eok-won said at the audit that he would take another look at the concerns raised over Toss' entry into online investment-linked finance.