New top regulator to keep financial companies on tighter leash

By Kang Seung-woo

With a new boss at the helm, the nation’s financial watchdog is expected to strengthen its monitoring activities.

“I will try my best to take care of lingering uncertainties in the financial market,” Financial Supervisory Service (FSS) Gov. Kwon Hyouk-se said in his inauguration speech.

“In order to do so, I will ensure the inspections of financial institutions will be stricter.”

His decision came after the FSS suffered much criticism for loose monitoring of financial players, causing turmoil such as the savings bank crisis.

The role of the FSS was initially divided into supervision and monitoring, but when former Governor Kim Jong-chang took over in 2008 the two were combined due to rising complaints that it is doubling regulation on financial institutions.

Supervision involves authorizing financial products and making regulations, while inspection is visiting financial institutions in order to enforce those regulations.

Critics argue that the integration ultimately weakened the ability to inspect the FSS.

“As the FSS overly supported the Lee Myung-bak Administration’s market-friendly and customer-friendly codes, it sometimes neglected its original duties,” said an official of the financial industry.

The FSS union welcomed Kwon’s plan to toughen the monitoring system.

“Although we do not know how the reorganization will be brought about, his aim to heighten inspections is welcoming,” the union said.

The 54-year-old life-time bureaucrat also said that he will not show mercy to offenders.

“So far, the FSS has been too lenient dealing with the risks taken by financial firms, but we will not put up with them anymore,” he said.

In addition, he is likely to cooperate with the Financial Services Commission (FSC), the decision-making body of the FSS.

“FSC Chairman Kim Seok-dong and I are familiar with each other and we will be able to work together well,” he said in a meeting with reporters last week.

Both studied business administration at Seoul National University and passed the civil service examination in 1979.