Regulatory Bodies Face Major Overhaul
By Park Hyong-ki
Staff Reporter
The nation's multi-layered financial regulatory system will likely be overhauled for major restructuring following the establishment of a new government headed by president-elect Lee Myung-bak on Feb. 25.
Currently, the Ministry of Finance and Economy (MOFE) and the Financial Supervisory Commission (FSC) are the financial authorities that draw up and approve key financial policies. The Financial Supervisory Service (FSS), a private supervisory agency with the characteristic of a public entity, implements policies and supervises financial firms as directed by the FSC.
Financial firms, academics and analysts have called for the two key governing organizations ― the FSC and FSS ― to be merged into a single independent body.
The two agencies were formed in 1998 and 1999, respectively, after integrating insurance, banking, securities and some other regulatory bodies in the wake of the Asian financial crisis.
With Lee promising to make government organizations slimmer and more efficient, the regulatory bodies, which have been criticized for its inefficiency and heavy regulations, will not be able to avoid major surgery, analysts and officials from financial firms said.
Some duplicated financial divisions of the finance ministry and the FSC could also be integrated, they said.
The trade union of the FSS said that it wants the upcoming administration to overhaul the duplicated supervision of the finance ministry, the FSC and the FSS.
Park Chul-soo, the leader of FSS trade union, said that President-elect Lee's transition team is known to consider integrating the supervisory functions of the three financial authorities. He said the union will propose suggestions for the revamping of the regulatory body.
``The financial regulatory body needs to bolster professionalism. To do so, its neutrality should not be undermined due to the protection of jobs of the FSC and the MOFE.'' Park said.
Analysts have also questioned the role of the regulatory bodies, especially the FSC, as they have been politically driven rather than being independent or neutral when supervising financial firms.
The commission, which falls under the administrative guidance of the presidential office, has claimed that the FSS was established to uphold the independence of regulatory functions by assisting the FSC.
Since there have been mounting calls for restructuring to the likes of regulatory bodies in developed nations, the new administration is expected to review and overhaul the current system for greater independence and neutrality.