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Overhaul of financial authorities faces staff backlash, opposition resistance
The Financial Services Commission office at Government Complex Seoul, Sunday / Yonhap
By Jun Ji-hye
Potential political wrangling over restructuring plan may threaten financial stability
The ruling bloc’s reorganization plan for financial policy and oversight is facing strong resistance from employees of the affected organizations and is expected to encounter hurdles in the legislative process due to opposition party objections, government insiders said Tuesday.
The government and the ruling Democratic Party of Korea (DPK) plan to pass the government reorganization bill at the National Assembly’s plenary session on Sept. 25 to reshape the functions of the current two-pillar system of the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) into four entities: the finance ministry, the revived Financial Supervisory Commission, the FSS and a new financial consumer protection agency.
Under the proposal, the FSC’s financial policy functions will be transferred to the finance ministry. The FSC will then be dismantled and reestablished as the Financial Supervisory Commission, which was dissolved in 2008, concentrating solely on inspection and supervisory roles.
The plan also calls for establishing a separate financial consumer protection agency by carving out the relevant function from the FSS, with both the FSS and this new agency designated as public institutions.
FSC employees have been left dispirited by the plan. Since the commission’s core financial policymaking role will be shifted to the finance ministry, a considerable number of staffers handling that work will have to move from Seoul to Sejong, where the ministry is headquartered.
The FSC had enjoyed strong popularity among civil servants largely due to its Seoul location. But with that advantage gone, an exodus of young workers could be inevitable.
“There was no process of gathering internal opinions on the restructuring,” one FSC official said on condition of anonymity. “Younger employees are already planning to enter law school or move to other ministries.”
The size of the reestablished Financial Supervisory Commission, which will remain in Seoul, is emerging as a key issue.
Currently, the FSC has 342 staffers, of whom about 263 could be affected by the restructuring.
The FSC is expected to engage in intense behind-the-scenes negotiations with the finance and interior ministries to secure its footing.
Labor union members and employees of the Financial Supervisory Service protest at the agency's headquarters in Seoul, Tuesday, criticizing the ruling party’s financial policy overhaul plan. Yonhap
FSS employees are also voicing anger, arguing that splitting the organization and designating both entities as public institutions would weaken its autonomy. They further argue that the spin-off undermines financial consumer protection.
The FSS has so far operated as a special corporation without capital, holding quasi-governmental status while maintaining relatively strong independence. Once designated as a public institution, however, it would fall under the Act on the Management of Public Institutions, coming under significant government control.
On Tuesday, the FSS labor union and employees staged a protest at the agency’s headquarters, holding signs reading “Withdraw the financial consumer agency spin-off” and “Stop public institution designation.”
FSS Gov. Lee Chan-jin was surrounded by the protesting employees on his way to the office but declined to answer questions from the union members and reporters seeking comment.
A day earlier, he sent an internal message expressing regret over the restructuring outcome and promising to ease staff concerns by facilitating personnel exchanges between the FSS and the new consumer protection agency, as well as improving employee benefits.
Financial Supervisory Service Gov. Lee Chan-jin pushes past reporters during a protest on his way into the agency's headquarters in Seoul, Tuesday. Yonhap
Besides protesting workers, another hurdle to the restructuring remains in the legislative process.
The Assembly's National Policy Committee, responsible for reviewing follow-up bills such as the FSC Establishment Act and the Banking Act, is chaired by Rep. Yoon Han-hong of the main opposition People Power Party, which opposes the restructuring.
On Monday, Yoon posted on Facebook that the overhaul requires amending laws under his committee’s jurisdiction, denouncing the plan as a “hastily drafted backroom proposal that excluded both the financial authorities and input from the field.”
If the DPK fails to secure opposition support, the bill could be advanced through the fast-track procedure. Even then, it could remain in committee for up to 180 days.
In this scenario, concerns have been raised that extended political wrangling could jeopardize financial stability.
“Given the importance of financial policy amid U.S. tariffs and an economic slowdown, increased confusion during the restructuring process could pose risks to financial stability,” a senior official at a major bank said.