This article was published on Aug. 7, 2025, at 8:48 a.m. on the ChosunBiz MoneyMove site.
The attitude of financial companies, which used to get nervous when the Financial Supervisory Service (FSS) showed up, has changed significantly recently. Since it takes about a year for results to come out after an FSS inspection, the sensitivity to issues tends to greatly diminish by the time sanctions are imposed, leading to claims that financial companies are less tense.
Concerns have been raised that if the FSS inspection leads to a 'late notification of results,' it could ultimately loosen internal controls at financial companies. While it is not right for the FSS to excessively wield its power over financial companies, it is essential that the FSS's role in preventing financial accidents and imposing sanctions does not become dull.
According to the financial investment industry on the 7th, the FSS recently completed regular inspections on DAISHIN SECURITIES and plans to carry out a main inspection on KB Securities as early as this month. Since a preliminary inspection requiring related data submission was conducted in the first half of the year for KB Securities, it seems likely that the main inspection will commence immediately.
Additionally, the FSS recently completed on-site inspections related to captive sales (the practice of predicting demand for publicly offered corporate bonds) targeting major securities firms. This means that larger inspections scheduled for this year are entering the final stages.
Despite the completion of a massive inspection by the FSS, the atmosphere in the securities industry is calm compared to the past. In the past, securities firms would mobilize their public relations teams and pay close attention to the FSS's announcement of inspection results, but recently a sense of calm is even being detected.
Industry insiders expect that the announcement of inspection results this year will not come until next year, indicating that there is no need to be overly anxious. A representative from a securities firm that recently underwent an FSS inspection noted, "The intensity of the FSS inspections has lessened compared to the past, and I understand that the announcement of this inspection's results may also be pushed to next year," adding, "Unlike before, where the internal atmosphere was unsettled after inspections, there has been no significant turmoil lately."
According to the records of the FSS's sanctions, most of the disciplinary actions are related to incidents that occurred between 2022 and 2024 and are only now being enforced. Since these incidents happened several years ago, the burden felt by securities firms has clearly diminished compared to before.
Even if issues related to internal controls are identified during the FSS inspection and sanctions are imposed on employees, there have been many cases where employees had already left the company. Consequently, the burden that companies feel is bound to be significantly reduced. Recently, Yuanta Securities Korea was sanctioned for attracting investors without submitting the securities report for derivative-linked securities (DLS) in 2017, but the employees who were targeted by these sanctions had already resigned. Kiwoom Securities, Mirae Asset Securities, and Samsung Securities also faced sanctions due to the illegal actions of former employees.
A source in the securities industry stated, "In the past, there was significant pressure regarding inspection results, but recently the workload generated while preparing for inspections has become a bigger concern," adding that "as turnover is quite frequent in this industry, many of the employees targeted by inspection results have often left the company by the time the results are announced, which indeed reduces the burden of FSS sanctions."
The FSS is also aware of these issues. However, due to the high volume of inspections, they acknowledge it is difficult to process them in a timely manner. In its business report this year, the FSS announced plans for a total of 738 inspections. While the number of inspections has increased by 59 (8.7%) compared to the previous year, the annual workforce allocated for inspections has actually decreased by 3.6% to 942.
Recently, with the issues of organizational restructuring and a prolonged vacancy in leadership, the notification of inspection results has been delayed more than before.
The FSS is responding by increasing the efficiency of its inspection methods as a self-help measure. The FSS selected Samsung Securities and Mirae Asset Securities as the first targets in the earlier conducted inspections related to captive sales, although these securities firms are not particularly prominent in the debt capital market (DCM). In light of this, market analysts suggested that the FSS might be primarily studying the inspection themes.
A representative from the FSS explained, "With the recent stagnation in personnel and an increase in the number of inspections, we are working to improve efficiency in our inspections," noting that "in the case of thematic inspections, we are first inspecting other companies as a study before inspecting the main institutions and then closely examining the necessary corporations based on that."