Financial watchdog chief faces leadership test amid reorganization controversy

Financial Supervisory Service Gov. Lee Chan-jin pushes past reporters on his way into the agency’s headquarters in Seoul, Tuesday, while employees protest outside against the government’s financial policy and oversight reorganization plan. Yonhap

Financial Supervisory Service (FSS) Gov. Lee Chan-jin faces a leadership test just one month into his role, as internal backlash has intensified following the ruling bloc’s announcement of a sweeping reorganization of financial policy and oversight, government insiders said Wednesday.

The government and the ruling Democratic Party of Korea finalized the plan on Sunday, confirming that the Financial Services Commission will be dissolved and reestablished as the Financial Supervisory Commission. Under the plan, both the FSS and a new financial consumer protection agency, which will be created by separating relevant functions from the FSS, will fall under the reestablished commission and be designated as public institutions.

On Wednesday, some 700 employees, which account for about 30 percent of the total FSS staff, gathered together on their way to work for a second straight day, wearing black and carrying signs reading “Withdraw the financial consumer agency spin-off” and “Stop public institution designation.”

Expressing opposition to the restructuring proposal, these employees warned that splitting off the consumer protection agency could undermine consumer safeguards in practice and that assigning public institution status to the FSS might jeopardize its independence by making it vulnerable to political influence.

“We have been on the front lines of financial consumer protection and have the most experience, but our views were completely ignored in this reorganization plan,” one employee who attended the protest said. “Supervising business practices and protecting consumers are closely connected, which means the consumer protection agency should not be separated.”

The unprecedented large-scale collective action by FSS employees is raising concerns that the lawyer-turned-governor, who took office on Aug. 14, could lose momentum on key initiatives he has been pursuing since his inauguration.

Members of the Financial Supervisory Service labor union and other employees protest for a second consecutive day outside the agency’s headquarters in Seoul, Wednesday, criticizing the government’s financial policy and oversight reorganization plan. Yonhap

The FSS has long been regarded as an elite institution, with about 47 percent of its staff made up of professionals such as lawyers and certified public accountants.

Employees are concerned that if the reorganization plan passes the National Assembly’s plenary session later this month as scheduled, the new financial consumer protection agency’s role could be limited to handling consumer complaints, effectively turning it into a “call center” for grievances, while staff would likely face high levels of work-related fatigue.

Some younger staff members have even described the separation of the financial consumer protection agency as a kind of “employment fraud” amid speculation that the new agency could be relocated outside Seoul, fueling fears that employees may be forced to move.

Many also believe that designation as a public institution will inevitably worsen their working conditions.

“Given the rumors of regional relocation, it will be difficult for the FSS and the new financial consumer protection agency to maintain personnel exchanges under the same framework,” another employee said. “However, our demonstrations should not be seen as merely about pay or benefits. We are doing this because the separation of the organization and public institution designation will pose a serious threat to the healthy development of the financial industry.”

The FSS union has requested a formal meeting with the governor and urged the establishment of an emergency task force on the reorganization under the direct authority of top management.

Should Lee and other executives remain unresponsive, the union is signaling the potential for a full-scale strike.

The watchdog is already experiencing operational setbacks. An anti-corruption and integrity workshop slated for Wednesday afternoon was canceled due to “circumstances in the department responsible for the issue.”

Without a conciliatory plan from Lee to ease tensions and persuade employees, disruptions to supervisory duties are expected to persist for the time being.