The Financial Services Commission and the Financial Supervisory Service plan to launch a study of inspection methods used by domestic and overseas supervisory agencies. Recently, the FSC and the Financial Supervisory Service (FSS) have been pushing through a task force (TF) to shift financial firm supervision from the current focus on ex post sanctions to a preventive approach, and they aim to prepare related improvement measures by referencing other agencies' cases.
According to the financial authorities on the 24th, the FSC and the Financial Supervisory Service (FSS) plan to collect and review cases from domestic supervisory agencies with investigative authority, such as the Korea Fair Trade Commission and the Personal Information Protection Commission, as well as from overseas supervisory agencies, at an upcoming meeting of the "Financial Administration Reform TF." The Financial Administration Reform TF was formed to overhaul administrative and supervisory work with the aim of strengthening the public nature and transparency of financial consumer protection functions. The TF is currently focusing on discussing ways for the FSS to shift to a preventive supervision framework and is exploring related alternatives by referencing other agencies' cases.
The TF plans to expand discussions to prepare improvement plans for the full range of financial supervision tasks, including sanctions and licensing. In particular, it will review whether separate improvements are needed to move away from the current approach in which the FSS conducts regular and ad hoc inspections of financial companies, the Financial Services Commission (FSC) reviews the results, and then decides the level of sanctions.
To gather industry feedback on the improvement plan, the TF will operate a mailbox without a real-name verification process and then receive the results from six associations (Korea Federation of Banks, Korea Life Insurance Association, General Insurance Association of Korea, Korea Financial Investment Association, Credit Finance Association, and Korea Federation of Savings Banks).
The TF appears to be a follow-up to the emergency meeting last September between Chairperson Lee Eog-weon of the Financial Services Commission and Lee Chan-jin, head of the Financial Supervisory Service. At the time, Chairperson Lee and Governor Lee said they would overhaul overall financial administration and supervision to strengthen the public nature and transparency of financial consumer protection functions. Subsequently, early this year, the Public Institution Management Committee of the Ministry of Economy and Finance reportedly accelerated related discussions by deferring designation of the FSS as a public institution while conditioning it on enhanced public nature and transparency.
An official at the Financial Services Commission (FSC) said, "The TF plans to identify each agency's investigative work methods and discuss how they can be applied to supervision of the financial sector."