By Park Hyong-ki
Financial companies of Korea's family-run conglomerates are expected to face tougher regulatory scrutiny in line with President Moon Jae-in's policy for chaebol reform, industry sources said Friday.
The Moon administration will likely nominate a figure, who will take a hard line against chaebol as much as Fair Trade Commission (FTC) chairman nominee Kim Sang-jo, to head the Financial Services Commission (FSC).
A few potential names for the top FSC position have been surfacing, including Kim Ki-sik, a former lawmaker of the Democratic Party of Korea, and professor Lee Dong-geol from Dongguk University.
Kim and Lee are known to be strong advocates of economic reform, with the former recognized for his hard-line policy calling for tougher regulations against chaebol financial companies.
Lee, a former FSC vice chairman during the Roh Moo-hyun administration, is also a hardliner on several chaebol issues, including adhering to stricter rules separating industrial and financial capital, and enforcing transparent corporate governance.
Observers say it may be a while before the Moon administration nominates an FSC chair. It is most likely to happen after Prime Minister-nominee Lee Nak-yon completes his confirmation hearing next week. Then, the new prime minister will discuss with President Moon nominations for finance minister and FSC chairman.
In addition to working with the finance ministry, the new FSC chief is expected to collaborate with the FTC to drive corporate reform, targeting top chaebol such as Samsung and Hyundai Motor that have numerous subsidiaries, including securities and insurance companies.
Although the two agencies have a non-binding pact to collaborate on ensuring market fairness and protecting consumer, the financial and antitrust regulators have overseen the industries separately.
President Moon proposed the integration of a regulatory oversight system to protect consumers from corporate and financial malpractice.
Given that financial companies are closely affiliated and linked with manufacturing companies via conglomerates' complex cross-shareholdings, the Moon camp has proposed the integration. This would enable regulators to oversee the whole market and dealings between financial and non-financial companies.
"We will not be able to move forward into a better future without changing our economic structure that focused on growth led by chaebol," Moon said during his election campaign.
FTC nominee Kim, a economics professor at Hansung University, said, "I accepted the nomination because my goal for chaebol reform perfectly matches with President Moon's," adding that he will immediately tackle issues concerning small businesses including mom-and-pop stores suffering from conglomerates' unfair practices.
He said he will send a strong signal to Samsung, Hyundai Motor, SK and LG to play by the rules.
Jang Ha-sung, a business professor at Korea University, said on social media that Kim as the FTC chief is the "best choice" made by the new administration, and he hopes President Moon will soon have his "economic dream team."
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