The financial authorities' plan to improve governance in the financial sector has struggled to gain momentum in National Assembly discussions. There was speculation that a concrete plan could emerge this month, but with a parliamentary audit set for next month, the timing of the announcement remains unclear.
According to the political community on the 14th, the National Policy Committee has been holding extended discussions with the financial authorities on the financial sector governance reform plan, but has yet to finalize it. The plan was referred to the National Policy Committee's subcommittee on bill review last month, but it was not placed on the agenda at the most recent meeting.
As the National Policy Committee begins full-fledged preparations for next month's parliamentary audit, there are concerns the reform plan discussions could again be pushed down the priority list. A National Assembly official said, "Within the National Policy Committee, there is a sense that the governance reform plan is not a priority right now. Some say it is better to adjust the pace if there are differences over key issues," adding, "As the talks drag on, the momentum for the policy push appears to have weakened somewhat."
The biggest sticking point is how far to curb a financial holding company chair's "third consecutive term." The financial authorities had considered legally restricting a chair's third term, but the idea has run into concerns it could excessively limit shareholders' rights of choice and trigger a constitutional dispute.
Rather than an outright ban on a third term, the financial authorities and the National Assembly are also discussing raising procedural hurdles. Ideas include requiring unanimous consent from the chair nominating committee—composed of outside directors—if a financial holding company chair seeks a third term, or setting a requirement that at least 75% approve the extension.
Some members of the National Policy Committee say even these mechanisms are excessive. The financial authorities, however, believe that with looser rules, the purpose of the reform—to address lengthy tenures and board independence—could be weakened.
The reform plan was launched after the government and the financial authorities raised concerns early this year about lengthy tenures of financial holding company chairs and the practice of "self-extensions." The authorities criticized shortcomings in the chair appointment process and in the oversight role of the chair nominating committee centered on outside directors, saying in April—no later than the first half—that they would present improvements, but they have not reached a conclusion for months.