FSS pledges greater autonomy to foreign firms

Financial Supervisory Service Gov. Zhin Woong-seob speaks during the financial watchdog's annual policy briefing to foreign financial companies operating in South Korea at a Seoul hotel, Tuesday. / Yonhap

By Nam Hyun-woo

The top financial regulator pledged Tuesday to grant greater autonomy to foreign financial firms operating here, while at the same time calling on them to set an example in following rules and protecting consumers.

Financial Supervisory Service (FSS) Governor Zhin Woong-seob said the watchdog will shift its supervision to "ex-post monitoring" from "ex-ante regulations."

The policy shift is designed to give more freedom to the firms by relaxing rules requiring them to make prior reports to the FSS.

At a meeting with the heads of the financial firms and other interested parties, Zhin said the regulator will make sure that its examination and supervision functions effectively.

Among the participants were U.S. Ambassador to Korea Mark Lippert, Bank of China Executive Vice President Gao Yingxin, HSBC Head of International Asia Pacific Jayang Rikhye, Citibank Korea CEO Park Jin-hei and DBS Bank Country Head Eugene Bang. Some 350 officials and executives from foreign financial companies and international credit rating agencies also attended the event at the Lotte Hotel in central Seoul.

"We expect financial firms to take their own initiative to continually improve their internal controls and exercise effective risk management," Zhin said. "We will certainly do our part to encourage new, more diversified and innovative products for the market as well."

The FSS announced that its policy direction this year will have a three-pronged approach consisting of providing greater autonomy and responsibility, preventing financial incidents through preemptive measures and enhancing trust toward the financial sector.

Zhin stressed that the government is well aware that foreign financial firms serve a "critically important" role and asked them to continue to help Korea's financial industry develop global competitiveness.

In return, he pledged the FSS will build a fair and transparent environment.

Bang, who is also chairman of Foreign Bankers Group in Korea, suggested that the FSS legislate separate rules and governance frameworks for foreign financial institutions for consistency.

"I'm not saying we want preferential treatment, but for the regulator to recognize that we are part of the integrated system of global companies," he said.

Bang also suggested the adoption of the universal banking system in order to foster innovative financial business growth. Universal banking refers to various financial services, including insurance, being provided by a single bank. Zhin said such a system is necessary in Korea.

During the meeting, FSS speakers said the regulator will closely monitor potential risk factors and come up with tangible reform of financial practices.

"Financial firms need to win the trust of customers and enhance accountability amid market uncertainties and a difficult business environment," said FSS Deputy Governor Kim Young-ki, adding that the FSS will also help firms create their own consumer protection systems.

Bank of China Executive Vice President Gao called for strengthened financial cooperation between Korea and China.

"Apart from traditional business cooperation in deposit, loan and payment, we can now expand our cooperation to consumer credit, asset management and bond issuance and advisory services," he said.

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