Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Reporter's notebook Will FSS chief's reform drive succeed?
By Kim Bo-eun
Financial Supervisory Service Governor Yoon Suk-heun / Korea Times file
By Kim Bo-eun
There was widespread tension among financial firms after Financial Supervisory Service Governor Yoon Suk-heun took his position in May 2018 and began spearheading moves to boost consumer protection.
In his first year, Yoon took drastic measures such as initiating an inspection of banks' sales of currency-linked financial derivative options that last took place more than a decade ago. He also revived a comprehensive audit of financial firms.
Yet the FSS essentially failed as a supervisory authority of financial firms in that it was unable to prevent the fiasco involving banks' mis-selling of derivative options that caused major losses for investors last year.
Two banks were found to have engaged in mis-selling high-risk options referred to as derivative-linked funds (DLFs) to elderly customers including a 79-year-old dementia patient who had trouble hearing and no experience in investing.
The banks came under severe criticism, but it was the FSS that was responsible for ensuring that the firms had functioning internal control systems.
Further to the troubles of the DLF case, a scandal involving Lime Asset Management broke out in the following months, further demonstrating a failure to properly supervise firms.
Investors in assets managed by Lime face huge losses as the hedge fund has frozen 1.7 trillion won in assets due to dodgy investments and fraudulent investment practices.
On Tuesday, another investment firm AlpenRoute stated it would halt redemptions for investors of funds amounting to 110 billion won, due to liquidity issues.
The FSS is looking into the firms, but this is only a response in the aftermath of the cases. The authority failed to prevent them from occurring.
Reflecting the events that broke out last year, the FSS said it would reorganize the agency to boost its consumer protection department.
It has doubled the number of affiliated divisions under the department. The FSS has divided the department so that one half focuses on preventing financial losses for consumers and the other half deals with cases as they arise.
The former half is set to review the terms of investment options as well as look into sales channels.
The FSS also conducted a major reshuffle of director-level staff, changing personnel for 70 percent of the positions.
The agency has placed younger staff in managerial positions, a move the FSS explained was based on performance, rather than seniority.
Finally, the authority appointed three female directors. This a painfully small figure, but still an improvement from before.
The reorganization and reshuffling of the agency under Yoon will only be credited once the changes prove to be effective in better monitoring financial firms.
Yoon, who has been referred to as “a tiger of financial reform,” stated at a New Year gathering of financial sector leaders that the FSS would seek to monitor risks with “the acuity of a tiger.”
Yet only when the FSS succeeds in properly carrying out its duty of supervision will Yoon truly be deserving of this title.