Conflict Between Eun Seong-su and Yoon Seok-heon Over 'One-Sided Binding Force'

Eun Sung-soo, Financial Services Commission Chairman, Opposes Stripping Financial Firms of Jurisdiction
Yoon Seok-heon, Financial Supervisory Service Chief, Says "Absolutely Necessary"

[Asia Economy Reporter Kangwook Cho] The two heads of financial authorities are showing discord regarding the introduction of 'one-sided binding force' on financial companies. Eun Sung-soo, Chairman of the Financial Services Commission, expressed reluctance from the perspective of 'depriving financial companies of their right to trial,' whereas Yoon Seok-heon, Governor of the Financial Supervisory Service, insists it is absolutely necessary. In the financial sector, attention is focused on whether Governor Yoon, who strongly advocates for the introduction of 'one-sided binding force,' will push it through despite Chairman Eun's de facto opposition. A bill for the introduction of the system has already been proposed within the ruling party.

Eun Sung-soo, Chairman of the Financial Services Commission, is attending the National Assembly's Public Administration and Security Committee hearing on the Financial Services Commission held on the 12th, responding to questions from lawmakers. Photo by Yoon Dong-joo doso7@

According to the financial sector on the 13th, Chairman Eun appeared at the National Assembly's Finance and Economy Committee's audit held the previous day and said regarding the introduction of one-sided binding force by the Financial Supervisory Service's Dispute Mediation Committee, "I understand it from the consumer protection perspective, but on the other hand, I have doubts about whether it is right to deprive constitutionally guaranteed trial rights."

Regarding this statement by the head of the Financial Services Commission, it is interpreted as expressing opposition to the introduction of 'one-sided binding force,' which would prevent financial companies from rejecting the Financial Supervisory Service's dispute mediation results. However, there is also an interpretation that he merely conveyed the view that it could be seen as 'depriving the right to trial,' rather than expressing his own opposition. Nonetheless, since this is the first time Chairman Eun has expressed a related stance after Governor Yoon mentioned the necessity of introducing one-sided binding force in August to secure the effectiveness of dispute mediation, the scale seems to tip toward the view that he is practically reluctant to introduce it.

One-sided binding force refers to a system where financial consumers can object to the financial authorities' mediation decisions, but financial companies cannot reject the dispute mediation results. In other words, if a financial consumer accepts the mediation proposal, the financial company must comply unconditionally. Recently, voices for legislation have emerged as financial companies' acceptance of dispute mediation has been sluggish in cases such as foreign exchange derivatives KIKO and Lime Lime trade finance fund incidents. In fact, even if financial companies reject dispute mediation proposals and proceed with lawsuits, there are no significant sanctions.

Yoon Seok-heon, Governor of the Financial Supervisory Service, is attending the audit of the Financial Supervisory Service at the Political Affairs Committee held at the National Assembly on the 13th, responding to questions from lawmakers. Photo by Yoon Dong-ju doso7@

Governor Yoon emphasized the need to introduce the 'one-sided binding force' system at the executive meeting in August. He particularly stated that the Financial Supervisory Service's relevant departments should actively prepare measures for 'one-sided binding force' to secure the effectiveness of the dispute mediation system.

The problem is that a day after Governor Yoon's remarks, the Democratic Party proposed a bill granting one-sided binding force to dispute mediation decisions under 20 million won. This has led to speculation that there was prior coordination between supervisory authorities and the government and ruling party, sparking strong opposition from the industry.

However, the legislation for 'one-sided binding force' has been shaky from the start, as not only opposition parties but also ruling party lawmakers have shown unfavorable attitudes toward the bill. Furthermore, with the head of the Financial Services Commission, the Financial Supervisory Service's superior institution, also expressing a negative stance, considerable friction is expected going forward.

Some expect that Governor Yoon is likely to push forward with the introduction of 'one-sided binding force' despite this unfavorable environment. Originally, one-sided binding force was included in the 'Financial Supervision Innovation Tasks' announced shortly after Governor Yoon's inauguration in July 2018. It is known to be a conviction he has held since his academic days.

However, if this happens, conflict with the Financial Services Commission will be unavoidable. Although Chairman Eun directly denied the conflict rumors with the Financial Supervisory Service earlier this year, rumors of discord between Chairman Eun and Governor Yoon have been consistently raised. It was also cited as a basis for discord rumors that Governor Yoon reportedly did not consult Chairman Eun during the process of deciding sanctions against financial company executives.

Some also predict that discussions on reforming the financial supervisory system, which had been stalled due to conflicts of interest between institutions, will accelerate. This was pointed out by the Board of Audit and Inspection, and the Financial Services Commission stated in the National Assembly audit report that "measures are being implemented." The current financial supervisory system has been maintained for 12 years since 2008. Regarding this, Chairman Eun responded, "It should be considered on a large scale together with government organizational restructuring."

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