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.
Talks over overhauling financial supervisory system reignited
Financial Services Commission Chairman Eun Sung-soo speaks during an audit of the agency at the National Assembly in Seoul, Monday. / Yonhap
By Kim Bo-eun
By Kim Bo-eun
The decades-old controversy over the financial authorities' supervisory system has been reignited amid the National Assembly's annual audit of government agencies.
Currently, the finance ministry is in charge of external policies, while the Financial Services Commission (FSC) focuses on domestic policies. The Financial Supervisory Service (FSS), under the FSC, is in charge of supervising financial firms. Previously, the finance ministry was also in charge of the domestic policies of the financial industry, and the FSC and FSS comprised one body.
Under the current system, the three bodies' roles overlap to some degree and there have been calls to integrate them to boost efficiency.
Disputes have resurfaced because of criticism that under the current system the FSS is unable to effectively supervise financial firms. This comes after a series of scandals involving investment firms' poor management of funds, causing substantial losses for investors.
The issue was brought up at the Assembly audit of the FSC earlier this week.
"Because, under the current system, the functions of policymaking, supervision and execution are separated, this slows down responses to issues that arise," Rep. Yoo Dong-soo of the ruling Democratic Party of Korea said, referring to the failure of financial authorities in the recent scandals.
Yoo proposed that the financial industry policy division under the FSC be integrated with the finance ministry. He said the supervisory role of financial firms should be assumed by a committee under the Prime Minister's Office.
The need to reorganize the current system was also taken up by the Board of Audit and Inspection of Korea (BAI), after conducting an inspection of the FSC in July last year.
The BAI said the system needed to be fixed to better protect financial product consumers.
At one point, the government is known to have considered splitting the FSS into two divisions, one supervising the financial health of institutions and the other in charge of consumer protection. This took into account models in the U.K. and the U.S.
But a restructuring of the system looks difficult, considering the conflicting interests of the parties involved.
"The issue would need to be considered in the framework of the government's organizational restructuring," FSC Chairman Eun Sung-soo said at the Assembly audit.
An FSC official said, "We currently are not considering dividing the FSS into two bodies. We have instead taken measures to better protect consumers under the current system, by bolstering the FSS' consumer protection department, doubling the personnel there."
There was a reorganization of the FSS in January.
"Regulations on financial consumer protection have also been set up and will go into effect next year," the FSC official said.
A senior official of the financial authorities said, "The FSS is a quasi-government agency and the FSC is a government body comprised of civil workers. This makes integration a complex task. While a separate body in charge of financial consumer protection may be needed, the FSS would likely not favor the idea of the institution being broken up."
It appears unlikely that any changes will be made to the system under the incumbent administration, which is in its fourth year.
Any possible changes would likely be made following an administration change, the official said.