Lee Chan-jin, head of the Financial Supervisory Service (FSS), said he would push a plan to require financial holding company boards to include at least one outside director with expertise in IT and consumer affairs.
Lee said this on the afternoon of the 10th at a meeting with the heads of financial holding companies held at the Korea Federation of Banks in Jung-gu, Seoul. Attending the meeting were Lee; Yang Jong-hee, chair of KB Financial Group; Jin Ok-dong, chair of Shinhan Financial Group; Ham Young-joo, chair of Hana Financial Group; Yim Jong-ryong, chair of Woori Financial Group; Lee Chan-woo, chair of NongHyup Financial Group; Hwang Byung-woo, chair of iM Financial Group; Bin Dae-in, chair of BNK Financial Group; and Kim Ki-hong, chair of JB Financial Group.
Lee said, "A holding company can win the trust of shareholders and the market when it secures a transparent succession system and a system of checks by independent directors," adding, "The requirements and procedures for management succession must be clear and transparent, and they must have fair and objective functions."
Lee went on to say, "We will diversify the channels for recommending outside directors, including recommendations by institutions representing the public," adding, "Support is also needed for forming a nomination committee with independence, such as by differentiating outside directors' terms, and for ensuring fair operations." Lee said he plans to launch a "governance improvement task force" this month, including industry and academia, to fix issues related to succession in the governance of financial holding companies.
Lee also said he would tighten oversight of financial companies' misselling. He noted, "Treating misselling as mere deviations by some sales sites as in the past, or responding only with post-facto compensation, can undermine trust in finance," adding, "The Financial Supervisory Service (FSS) will make proactive financial consumer protection the top priority in all ongoing tasks and concentrate supervisory and inspection capabilities to the fullest."
Lee said he would also strengthen supervision of the IT security systems of financial holding companies. Lee noted, "When examining financial companies, we will focus on the adequacy of IT governance and security systems," adding, "We will also bolster proactive security supervision, including analysis and assessment of security vulnerabilities."
Lee also stressed the importance of productive finance. He told the holding company chairs, "A loan structure centered on real estate collateral, which we have relied on for a long time, cannot continue," adding, "Please broaden the scope of finance so that funding can flow more widely into productive areas such as technology-innovation corporations and revitalization of regional economies." Lee pledged to actively seek ways to reduce capital burdens on the financial sector in this process.
Lee said he would establish a comprehensive evaluation system for inclusive finance and introduce a co-prosperity finance index to encourage financial holding companies to fulfill their social responsibilities. Through this, the Financial Supervisory Service (FSS) plans to assess the level of inclusive finance implementation—such as support for low-income people and small merchants and social contributions—by financial holding companies, as well as the level of win-win cooperation with small and medium-sized enterprises.