Eun Sung-soo, Financial Services Commission Chairman, "Will Introduce Internal Control Regulations for Financial Groups"

Eun Sung-soo, Chairman of the Financial Services Commission

[Asia Economy Reporter Kim Hyo-jin] Eun Sung-soo, Chairman of the Financial Services Commission, stated on the 24th, "We will introduce regulations for internal control systems at the financial group level."

Chairman Eun made this announcement during the 'Financial Group CEO and Expert Meeting' held at the Government Seoul Office in the afternoon, attended by representatives and experts from Samsung Life Insurance, Hanwha Life Insurance, Mirae Asset Daewoo, Kyobo Life Insurance, Hyundai Capital, DB Insurance, and others.

The financial authorities plan to introduce a 'Group Internal Control Council' involving compliance officers from financial companies within the group. This council aims to discuss common internal control policies and current issues across the group.

Chairman Eun also revealed plans to improve the risk assessment method to comprehensively reflect group risks, moving beyond the current evaluation system that calculates capital adequacy ratios by deducting overlapping capital within the group and considering group risk.

He added, "We also intend to actively incorporate the industry's opinion that incentives for risk management efforts are necessary."

Furthermore, Chairman Eun stated, "We plan to implement disclosures at the financial group level to help the market fairly evaluate group risks," adding, "We will compile information scattered across financial companies within the group into an easy-to-understand format, ensuring it does not overlap with individual company disclosures to minimize additional burdens on financial companies."

The 'Financial Group Supervision System' is a regulatory framework managing financial groups with assets exceeding 5 trillion won that operate financial companies in two or more sectors such as deposit-taking and lending, financial investment, and insurance. It is one of the Moon Jae-in administration's national tasks aimed at preventing the recurrence of past mistakes where the simultaneous insolvency of financial affiliates caused damage not only to the companies but also to consumers.

Since July 2018, the system has been piloted based on model guidelines, targeting six companies: Samsung, Hanwha, Hyundai Motor, DB, Mirae Asset, and Kyobo.

Earlier, on the 29th of last month, the financial authorities held a seminar attended by Min Byung-doo, Chairman of the National Assembly's Political Affairs Committee, Kim Sang-jo, Chief Presidential Secretary for Policy, and others to discuss the results of a research project on improvements to the Financial Group Supervision System, which began last year and concluded earlier this year.

At the seminar, improvement measures were announced to prevent risks in advance, including the establishment of a comprehensive group risk evaluation plan, the creation of a group self-management system, and the establishment of a voluntary monitoring system through disclosure of major risk factors.

This content was produced with the assistance of AI translation services.