Yoon Seok-heon Resolutely Advocates for 'Financial Supervision Independence'

"To Prevent Consumer Harm, Supervision System Must Be Reorganized"
"Policy and Supervision Should Be Maintained in a Check and Balance Relationship"

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), has once again emphasized the necessity of independence in financial supervision functions. He also made a candid remark that various fund accidents, which have frequently occurred since last year, partly stem from problems in the financial supervision system.

Governor Yoon’s comments are interpreted as a message repeatedly sent to the Financial Services Commission (FSC) and political circles that strengthening the independence of the FSS will be a core task to be pursued during the remaining six months of his term. This statement has also been interpreted as reigniting tensions between FSC Chairman Eun Sung-soo and Governor Yoon.

According to the financial sector on the 24th, Governor Yoon stated at an online year-end meeting with the press corps the day before, "To gain consumer trust, prevent consumer harm, and develop the financial industry, reforming the financial supervision system is above all necessary."

Under the current supervision system, the responsibility between the FSC’s supervisory policies and the FSS’s supervisory execution becomes unclear, leading to inefficiencies in financial supervision where post-incident improvements are not properly made, according to Governor Yoon. Currently, the FSC oversees financial policy and supervision, while the FSS is entrusted with and performs tasks and authorities such as inspection, supervision, and administrative sanctions.

Governor Yoon said, "If you look at financial accidents in our country, there are roughly certain types," and added, "The government tries to foster the financial industry, but in some cases, this creates risks, which ultimately become a burden on consumers." He also mentioned, "The financial policy and supervisory policy parts should be brought into a check and balance relationship," and "There must be organic operation between policy and execution in supervision."

He revealed that he is reviewing various independence measures, including overseas cases, and plans to soon submit a proposal on this to the National Assembly. He added, "The International Monetary Fund (IMF) also pointed out that more operation and execution are needed for financial supervisory organizations," and "What happens in the market should be reflected in policy, and the intent of the policy should reach execution, so policy execution and supervision must be linked."

Expected Focus During Remaining Term

Strengthening the independence of financial supervision functions has been a conviction Governor Yoon has held since his academic days. Earlier in October at a National Assembly audit, he opened the debate on the 'FSS independence theory' by saying, "(The FSC and FSS) bear conflicting objectives of financial industry promotion and supervision, so from the start, there was a seed of problems." This means that the FSS inevitably becomes subordinate to the FSC in terms of budget, organization, and personnel.

At that time, Chairman Eun countered by saying, "(Even the Bank of Korea, which has guaranteed independence) is controlled by the Ministry of Strategy and Finance regarding its budget," and asked, "Would you be happy if the FSS were designated as a public institution and controlled by the Ministry of Strategy and Finance?"

Following large-scale fund accidents such as Lime and Optimus, controversies over the FSS’s supervisory shortcomings arose, and voices calling for designating the FSS as a public institution to strengthen management also surfaced. Chairman Eun’s blunt opposition to this sensitive issue from the FSS’s perspective was interpreted as a sign of his strong negativity toward Governor Yoon’s claims.

This confrontation between the two sides seemed to subside quietly after Chairman Eun stated last month, "If FSS members do not want it, we (the FSC) will not support (designation as a public institution)." A financial sector official predicted, "Since Governor Yoon is relatively free from political interests, he will likely push forward the reform of the supervision system very swiftly," and added, "Whether Chairman Eun wants it or not, he may become more deeply involved in this debate going forward."

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