Jeong Eun-bo "Expansion of Thematic Inspections and More... Strengthening Preemptive Supervision of Financial Companies"

Meeting with Major Commercial Bank CEOs on the 9th
Emphasizing the Three Fundamental Principles of Financial Supervisory Duties

Jung Eun-bo, Governor of the Financial Supervisory Service, is delivering a greeting at the Financial Holding Companies Chairmen's Meeting held at the Bankers' Hall in Jung-gu, Seoul on November 3, 2021.

[Asia Economy Reporter Jin-ho Kim] Jeong Eun-bo, Governor of the Financial Supervisory Service (FSS), stated on the 9th, "We will expand ad-hoc thematic inspections as part of strengthening preemptive supervision on financial system stability and the soundness of financial institutions."

Governor Jeong made these remarks at a meeting with major commercial bank CEOs held at the Kensington Hotel in Yeouido, Seoul. Most of the key bank CEOs attended the meeting, including Governor Jeong, Kim Kwang-soo, Chairman of the Korea Federation of Banks, Hur In, CEO of KB Kookmin Bank, Jin Ok-dong, CEO of Shinhan Bank, Kwon Kwang-seok, CEO of Woori Bank, and Park Sung-ho, CEO of Hana Bank.

Governor Jeong first emphasized three fundamental principles in performing financial supervision duties: financial supervisory administration based on 'law and principles,' harmony and balance between preemptive and post-supervision, and preemptive protection of financial consumers.

He said, "When financial supervision duties are performed according to law and principles, predictability and legal stability are secured, which can enhance market trust. The personal beliefs of financial supervisors cannot take precedence over law and principles."

He added, "At present, preemptive supervision that identifies and manages internal and external risk factors in advance is important, and consumer protection cannot be sufficiently ensured through post-supervision measures such as compensation for damages." Accordingly, the FSS plans to establish measures to prevent consumer harm from the design and development stages of financial products.

Regarding the plan to strengthen preemptive supervision, Governor Jeong said, "We will enhance the continuous monitoring function that quickly detects various risk factors in the financial system and financial institutions," and "We will expand ad-hoc thematic inspections through timely responses to significant risks identified through continuous monitoring."

He also announced plans to further advance future predictive supervisory tools such as stress tests and scenario analyses.

He emphasized preemptive supervision from the perspective of financial consumer protection. Governor Jeong said, "We will build a financial product monitoring information system and filter out financial products that pose a risk of consumer harm during the review process," and "We will also strengthen inspections to ensure the effective implementation of the six principles of the Financial Consumer Protection Act at frontline sales sites."

Governor Jeong mentioned recent market uncertainties and urged banks to maintain sufficient loss absorption capacity and thoroughly prepare for their own vulnerabilities. He said, "Please strengthen management so that household debt does not become a risk factor for the economy," and particularly ordered meticulous management to ensure that real demand loans for low-income and vulnerable groups are handled without disruption.

Governor Jeong emphasized, "Please strengthen banks' internal controls and risk management and work to establish a healthy organizational culture that can support these efforts," and added, "We will continue to promote banks' digital transformation and business model innovation in preparation for digitalization."

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