FSC, FSS chiefs still poles apart

Financial Services Commission Chairman Eun Sung-soo, left, and Financial Supervisory Service Governor Yoon Suk-heun / Korea Times file

By Kim Bo-eun

The heads of local financial authorities continue to be at loggerheads over multiple issues, stemming from a structural reform of a government body in 2008.

Currently, the Financial Services Commission (FSC) is in charge of policies on developing the local financial industry. The Financial Supervisory Service, under the FSC, executes the policies and also supervises financial firms here.

The two entities previously comprised one government body, but were split up in 2008.

From the separation, the FSC earned authority over all matters concerning the FSS ― including its budget and personnel affairs ― which has led to soured relations between the bodies.

The FSS as the supervisory agency has increasingly been voicing the need for independence from the FSC over its budget as well as authority over policymaking.

This comes after the FSS was criticized for failing to prevent a series of scandals involving financial firms' mis-selling and mis-management of financial products.

The FSS has contended it does not have the financial and human resources capacity to monitor hundreds of companies. The agency points a finger at the FSC for the various limitations it faces, as the FSC is the body that determines the size of the FSS budget.

FSC Chairman Eun Sung-soo, however, said all government bodies are subject to budget approval.

"The Bank of Korea, for example, is subject to approval by the finance ministry," he said.

"The FSS would also need to be subject to approval," Eun said, stating even if the FSC does not assume this role of approval, the finance ministry or National Assembly would.

The FSS also said it faces limits in supervision because inspections may be barred in the case of insufficient legal grounds.

"The FSS executes supervision but does not have authority over supervision regulations," FSS Governor Yoon Suk-heun said at a National Assembly audit on Friday. "It is difficult to execute supervision over a certain situation in the market according to our will."

The two chiefs also showed differences over the reappointment of the financial group's chairmen, amid various scandals involving misconduct by their affiliate banks and brokerages.

The FSS' Yoon has voiced opposition over the matter.

"Our stance is that stronger regulations are needed against self-reappointments," he said, referring to the status quo where basically the chiefs of financial groups are able to serve additional terms, regardless of their responsibility in possible cases of misconduct that occur within the group.

The FSC's Eun, however, said, "When financial authorities intervened in the appointment of financial group chiefs in the past, problems still existed."

He added, "If in the case the FSC or FSS were to intervene in the matter, based on mistrust of the board members or shareholders, we would still need a social consensus. The direction that should be taken is shareholders and board members making the decision, and various measures would need to go into effect simultaneously, such as legislating related regulations or social monitoring."