The Financial Supervisory Service said on the 21st that a pilot consulting program for large specialized credit finance companies and savings banks that must adopt responsibility maps by July next year found numerous shortcomings, including excessive concentration of responsibilities in specific executives and duplication or omission of responsibilities related to financial sales.
The Financial Supervisory Service (FSS) said it recently conducted a pilot operation of responsibility maps for 24 specialized credit finance companies with asset aggregates of 5 trillion won or more and 33 savings banks with asset aggregates of 700 billion won or more, based on assets at the end of the most recent business year.
In this pilot operation, 22 specialized credit finance companies and 30 savings banks participated, accounting for 91% of the companies Daesang the pilot covered. This exceeds the application rate of 29% (18 out of 62 Daesang companies) during the second half of 2024 pilot for banks and financial holding companies, and 79% (53 out of 67 Daesang companies) during the first half of 2025 pilot for large securities companies and insurers.
The Financial Supervisory Service (FSS) analyzed the responsibility maps submitted by participating financial companies and then conducted individual consulting, and the financial companies plan to submit improved responsibility maps, taking into account organizational structures and other factors reflecting the consulting results, by July 2 next year.
Reflecting previous pilot results and the findings of on-site inspections, the Financial Supervisory Service (FSS) said that while some shortcomings observed so far, such as multilayered allocation of responsibilities, have decreased, items still requiring supplementation were identified due to factors such as insufficient understanding of the responsibility map system.
First, cases were uncovered in which an excessive number of responsibilities were allocated to a specific management-control executive. The Financial Supervisory Service (FSS) pointed out that if too many responsibilities are concentrated in a particular executive, conflicts of interest between responsibilities may arise and expertise may be lacking, and management-duty obligations may be carried out in a perfunctory manner, making effective internal control difficult.
Many cases of duplication and omission of responsibilities related to financial sales were also identified. As multiple executives shared similar responsibilities by product or service type, distinctions among each executive's role were unclear, or details of some executives' responsibilities were omitted. The Financial Supervisory Service (FSS) said that when allocating similar responsibilities by executive, they should be clearly distinguished to avoid duplication, and when the responsibilities are of the same nature with only the product or service differing, the responsibility map should be drawn up without omissions.
Numerous cases were also found in which the entries in the responsibility map itself were inadequate. The Financial Supervisory Service (FSS) explained that if the detailed content and management obligations corresponding to each executive's responsibilities are not clearly organized, it becomes difficult to establish specific management actions and activity plans for each executive, raising concerns that internal controls may not function effectively.
In particular, many cases were found in which the responsibilities and key management obligations listed in the responsibility map did not align with the concepts or the entries were inadequate. Some financial companies drafted the documents in a way that made it difficult to grasp specific details with only the detailed responsibilities or only the management obligations, or they entered detailed items or management obligations unrelated to the responsibilities. In addition, many companies effectively wrote identical details for management obligations or drafted them at the level of individual tasks.
Issues previously raised during last year's pilot for large securities companies and insurers, such as the problem of the CEO concurrently serving as board chair, were again confirmed in this pilot. It was also found that some excluded nonexecutive directors from the allocation of responsibilities as a matter of course, or did not allocate responsibilities to inside directors on the grounds that they lacked final decision-making authority.