With the financial authorities' reorganization falling through, the Financial Supervisory Service is preparing a plan to overhaul its organization. Although the agency's designation as a public institution was excluded from this reorganization, it appears to have judged that self-correction is needed because the embers have not been completely extinguished.
According to the financial sector on the 26th, the FSS convened an emergency executives' meeting after announcing the decision the previous day to withdraw the reorganization and public institution designation, and discussed follow-up measures. At the meeting, participants discussed the need to revamp the work system centered on "strengthening financial consumer protection," which was the starting point of the reorganization talks, and to realign the organizational chart. An FSS official said, "We agreed to draw up an organizational reform plan that puts the emphasis on strengthening consumer protection as soon as possible."
Given the high likelihood that the debate over designating the FSS as a public institution will resurface, the view is that preemptive reform aligned with the government's expectations is necessary. The Ministry of Economy and Finance convenes the Public Institution Management Committee (PIMC) at the end of every January to deliberate and vote on whether to designate public institutions, and sentiment within the ruling bloc still strongly favors designating the FSS as a public institution. Although the designation was not included in the organizational overhaul blueprint drawn up by the Presidential Committee on Policy Planning, it was added during consultations between the party and the government. A ruling-party official said, "Designation as a public institution is not as complicated as an organizational overhaul. It only needs a vote at the PIMC," adding, "The argument that control over the FSS is necessary still carries weight."
The controversy over whether to designate the FSS as a public institution has repeated for decades. The FSS was designated as an "other public institution" in 2007, but the designation was lifted in 2009 on the grounds that its independence could be undermined. Then in 2017, as internal hiring corruption and lax management at the FSS came to light, efforts to designate it as a public institution resumed in earnest.
The FSS avoided designation as a public institution on the condition that it carry out measures such as eradicating hiring corruption set by the government, strict management evaluations, and resolving inefficient organizational operations. However, with the Lime Asset Management and Optimus private fund scandals in 2020, controversy erupted over the FSS's lax supervision and staff discipline, putting the question of designation back on the table. Last year, the National Assembly Budget Office also recommended that the FSS be designated as a public institution.
The FSS maintains that it must block designation as a public institution. It argues that bodies performing financial supervision must have guaranteed independence. There is also significant anxiety about worsening staff treatment and the possibility of relocation to the provinces. On the morning of the day, Yoon Tae-wan, the FSS emergency countermeasures committee chair, held a staff briefing and emphasized, "The issue of designation as a public institution still remains. I understand that the final decision on whether to designate will be made in January next year," adding, "It is important to show work results in the second half of the year, especially on tasks related to financial consumer protection."