'Financial Supervisory Service Independence' Gains Momentum in the National Assembly... "Industry and Supervision Policies Must Be Separated"

[Asia Economy Reporter Kim Hyo-jin] The National Assembly Legislative Research Office has advocated for the independence of financial supervisory functions. This draws attention as discussions about separating the Financial Supervisory Service have surfaced both inside and outside financial authorities and the financial sector.

According to political and financial circles on the 15th, the National Assembly Legislative Research Office, which supports the legislative activities of lawmakers, stated in its report titled "The Necessity of Reforming South Korea's Financial Supervisory System and Legislative Tasks" released on the 13th that "independence and efficiency must be secured through the separation of financial industry policy and financial supervisory policy, and the responsibility of financial supervisory institutions should be strengthened."

Since 2008, the system where the Financial Services Commission handles financial policy and supervision functions while the Financial Supervisory Service executes supervision has been maintained. However, to prevent recurrence of financial accidents and restore trust in financial supervision, it is necessary to face the limitations of the current financial supervisory system and improve it.

The Legislative Research Office pointed out, "There is a possibility that financial policy may overwhelm supervisory policy, and supervisory policy may be used as a means to support economic measures," adding, "Under the current system where financial supervisory policy and execution are separated, confusion and inefficiency in supervisory execution may occur, and the responsibility may be unclear, allowing both institutions to evade accountability for financial accidents."

The office further stated, "All parts related to financial supervision among the Financial Services Commission's jurisdiction should be transferred to the financial supervisory institution, and the Financial Services Commission's guidance and supervisory regulations should be deleted."

Additionally, the Legislative Research Office argued for the Financial Supervisory Service's budget independence, stating, "Since the supervisory fees, which are the Financial Supervisory Service's source of income, can be passed on to financial consumers, it is appropriate for the Financial Supervisory Service's budget to be controlled by the National Assembly." Currently, the Financial Supervisory Service's budget and settlement require approval from the Financial Services Commission.

However, the office also pointed out the need to establish checks and balances such as strengthening National Assembly oversight to prevent abuse of discretion and corruption due to the Financial Supervisory Service's independence, and to enhance responsibility for supervisory failures. It added, "Information on major decision-making should be disclosed to enable effective accountability."

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