Growing Conflict Within Financial Authorities... Organizational Restructuring Faces Mounting Hurdles

Strong Employee Opposition to the Separation of the Financial Consumer Protection Agency from the Financial Supervisory Service
Protests Expected to Continue This Week
Internal and External Turmoil Continues over the Dissolution of the Financial

Members of the Financial Supervisory Service Labor Union and employees condemned the government’s organizational restructuring plan to designate the Financial Supervisory Service as a public institution and separate the Financial Consumer Protection Agency from the Financial Supervisory Service in the lobby of the Financial Supervisory Service in Yeouido, Yeongdeungpo-gu, Seoul, on the 9th. Photo by Yonhap News

Internal conflict within the financial supervisory authorities is intensifying as employees continue to protest against the organizational restructuring. The labor union of the Financial Supervisory Service plans to continue demonstrations in opposition to the separation of the organization, while internal confusion is also growing at the Financial Services Commission, which is facing both dissolution and relocation to Sejong. With opposition parties expected to delay the passage of related bills in the National Assembly, there is a growing likelihood that the conflict will be prolonged.

Strong Employee Opposition to the Separation of the Financial Consumer Protection Agency from the Financial Supervisory Service, Protests Expected to Continue

According to the financial sector on September 15, the labor union and employees of the Financial Supervisory Service are planning to hold a large-scale protest in front of the National Assembly this week to voice their opposition to the organizational restructuring. The government intends to amend the Government Organization Act to separate the Financial Consumer Protection Agency from the Financial Supervisory Service, but employees are strongly opposed to this plan.

Last week, about 700 employees-one-third of the entire staff-gathered to protest the restructuring during the morning commute, and this week, they are considering expanding the protest to the National Assembly. In addition, they are planning a parliamentary forum with opposition lawmakers from the People Power Party to discuss their opposition to the proposed amendments to the Government Organization Act. The labor union of the Financial Supervisory Service is also escalating its response, even considering a general strike as a last resort.

Employees argue that separating the Financial Consumer Protection Agency will cause functional conflicts between the two organizations and ultimately undermine financial consumer protection. They also oppose the government's plan to designate the Financial Supervisory Service as a public institution, claiming it could undermine the independence of the financial supervisory authorities. Lee Chanjin, Governor of the Financial Supervisory Service, also stated during a meeting with the labor union on September 12, "I take the concerns about the inefficiency of organizational separation and the potential weakening of independence and neutrality due to public institution designation very seriously."

Discussions about transferring major functions of the Financial Supervisory Service to the newly reorganized Financial Supervisory Commission are also fueling employee opposition. The government is considering making disciplinary warnings for executives of financial companies and dismissal decisions for general employees subject to the approval of the Financial Supervisory Commission. There are also discussions about transferring the core functions of the Financial Supervisory Service, such as the Disciplinary Review Committee and the Dispute Mediation Committee, to the new commission.

If the Financial Consumer Protection Agency is separated and key functions like disciplinary action and dispute mediation are transferred to the new commission, the role of the Financial Supervisory Service could be significantly reduced. Yoon Taewan, head of the emergency committee of the Financial Supervisory Service labor union, said, "The Financial Services Commission is trying to take over the Disciplinary Review Committee and the Dispute Mediation Committee," and demanded, "The Governor of the Financial Supervisory Service must prevent this."

Lee Eokwon, the nominee for the Financial Services Commission chairman, is reviewing documents at the confirmation hearing held by the National Assembly's Committee on Finance and Economy on September 2, 2025. Photo by Kim Hyunmin

Continued Internal and External Confusion Over the Dissolution of the Financial Services Commission

The Financial Services Commission is also facing turmoil, even after Lee Eokwon was appointed as chairman. Due to opposition from the minority party, the confirmation report was not adopted, leading President Lee Jaemyung to push ahead with the appointment on September 12. After much controversy, Chairman Lee began work that day, but now faces the difficult task of managing both a disbanding organization and a host of urgent financial issues.

The Financial Services Commission is currently confronted with a backlog of urgent issues, including household debt management, the establishment of a bad bank, stablecoins, and strengthening productive finance. Many employees express frustration, saying, "Even as the organization is being dissolved, the workload is only increasing." However, as a government agency, the collective action capacity is considered weaker compared to the Financial Supervisory Service.

To prevent organizational unrest, Vice Chairman Kwon Daeyoung held a staff meeting on September 12 to gather opinions on the restructuring. There was also discussion of selecting representatives by rank and years of service to discuss the progress of the restructuring.

Another major variable is the heightened conflict between the ruling and opposition parties, who are responsible for passing related legislation. On September 10, both parties reached an agreement on amendments to the three major special prosecutor bills and the government reorganization plan, but the agreement collapsed within a day, delaying the handling of the restructuring plan.

President Lee also stated at a press conference marking his first 100 days in office, "There is no need to rush the Government Organization Act. We can designate it as a fast-track item for six months." Many expect that if the restructuring of the financial authorities is designated as a fast-track item, it will be difficult for the government to complete it within the year as originally planned. In addition, establishing the new Financial Supervisory Commission will require new legislation, which will also need cooperation from the opposition party, suggesting that further difficulties lie ahead.