Financial Supervisory Service Designated as a Public Institution... "Requirements Met" VS "Not Allowed from Independence Perspective"

Financial Supervisory Service's Inadequate Oversight of Lime and Optimus Asset Management Fund Scandals... Government Must Enforce Strict Regulation

[Asia Economy Reporter Jang Sehee] The Ministry of Economy and Finance and the Financial Services Commission are showing differing opinions on designating the Financial Supervisory Service (FSS) as a public institution. The Ministry of Economy and Finance insists that the FSS, which was involved in the Lime fund mismanagement controversy, should be designated as a public institution for strict management, whereas the Financial Services Commission argues that the independence of the FSS must be preserved.

According to the Ministry of Economy and Finance on the 10th, last month the ministry conveyed to the Financial Services Commission that the FSS meets the designation requirements under the Act on the Management of Public Institutions (Public Institution Management Act). They also requested the Financial Services Commission to provide related feedback.

Previously, on January 31, 2018, the Ministry of Economy and Finance discussed the issue of designating the FSS as a quasi-governmental agency at the Public Institution Management Committee meeting but deferred the decision pending improvements to identified problems. At that time, the organizational restructuring was evaluated as insufficiently streamlined. In response, the Financial Services Commission and the FSS stated in January 2018 that instead of designating the FSS as a quasi-governmental agency, they would meet conditions such as management evaluations through the Financial Services Commission and measures to eradicate hiring irregularities.

At that time, political circles also expressed opposition, arguing that it could undermine the autonomy and independence of the FSS.

Recently, as issues such as lax management and supervisory failures in the Lime and Optimus Asset Management fund incidents surfaced, it is interpreted that the Ministry of Economy and Finance aims to increase government control by designating the FSS as a public institution.

However, the Financial Services Commission opposes this, citing concerns that it would undermine the supervisory independence of the FSS. Financial Services Commission Chairman Eun Sung-soo stated at the National Assembly in November last year regarding the designation of the FSS as a public institution, "From the perspective of independence, I hope it will not be designated as long as four reserved conditions are met."

Meanwhile, the Ministry of Economy and Finance plans to hold a Public Institution Management Committee meeting at the end of this month to review the Financial Services Commission’s opinions and then decide on whether to designate the FSS as a quasi-governmental agency.

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