Yoon Seok-heon, Financial Supervisory Service Chief: "DLF Severe Disciplinary Action, My Decision Would Be the Same Even If Time Were Reversed"

Yoon Seok-heon, Governor of the Financial Supervisory Service

[Asia Economy Reporter Kim Hyo-jin] Yoon Seok-heon, Governor of the Financial Supervisory Service (FSS), said on the 28th regarding the controversy over the heavy disciplinary actions against financial company executives following the overseas interest rate-linked derivative-linked fund (DLF) incident, "Even if I turn back the clock by several months, my decision would be the same."

Governor Yoon made this remark reflecting on the DLF incident as the biggest challenge during a written press conference held on the occasion of his 2nd anniversary in office.

The FSS Disciplinary Committee decided in January to issue severe disciplinary warnings to Sohn Tae-seung, Chairman of Woori Financial Group, and Ham Young-joo, Vice Chairman of Hana Financial Group, holding them responsible for the large-scale losses caused by the incomplete sales of DLFs. The disciplinary actions against Chairman Sohn and Vice Chairman Ham were finalized by Governor Yoon's approval.

Chairman Sohn, who faced a situation where reappointment as chairman might be impossible due to the FSS sanctions, filed a provisional injunction to suspend the effect of the sanctions with the court last month. The court accepted the injunction, allowing him to secure his reappointment safely. The court is currently reviewing the main lawsuit filed by Chairman Sohn against Governor Yoon, seeking cancellation of the sanctions.

Governor Yoon said, "It could be seen as a failure to properly read the market," adding, "There were some communication issues, so I think it is necessary to make decisions more cautiously from now on."

Governor Yoon explained that Korea's financial sector lacked consideration for financial consumers, and therefore he wanted to change the paradigm of finance.

He pointed out, "Looking at the recent financial environment, there is low growth and low interest rates, but consumers want high returns in their own way, and financial companies have been tacitly following this trend, spreading the pursuit of high risk and high returns."

Governor Yoon said, "I think we need to send a message to financial companies regarding consumer protection, and if such wrongdoing was widespread in an organization, legally it would be considered internal control issues. The FSS has addressed this through disciplinary committees and institutional procedures."

Governor Yoon interpreted, "It seems that from the outside, our intentions were misunderstood as imposing excessively harsh penalties." He added, "However, in fact, looking at overseas cases, there are instances where much harsher sanctions are imposed than ours. Sanctions are not imposed out of hatred for institutions or individuals, but because such serious incidents occurred, someone must take responsibility to prevent recurrence, so that choice was made."

Regarding the criticism that "since the examiner (FSS Governor) proposes the penalty, the sanction process is problematic," Governor Yoon stated, "I made decisions within the given institutional framework," and emphasized, "Within the given system, what I can do is decide whether to go left or right, but changing the given framework is absolutely not possible."

On large-scale financial support for companies and small business owners affected by the novel coronavirus infection (COVID-19), Governor Yoon expressed, "It is currently policy-wise appropriate to put out the fire decisively."

He reiterated, "There may be views that the funds are being poured excessively, but still, active support is the right approach," and said, "The financial authorities must ensure that the policies and funds presented by the government so far reach the field quickly and effectively."

Governor Yoon predicted that if the COVID-19 situation prolongs, various supports will increasingly become the responsibility of the financial sector, centered on banks. He said, "I think it will become a situation where the medium- to long-term resilience of the banking sector becomes important," adding, "I believe the International Monetary Fund (IMF) took this into account and that their assessment of resilience is helpful." Governor Yoon also evaluated that despite the impact of COVID-19, the soundness of the financial sector has not deteriorated significantly.

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