Financial Supervisory Service Changing Inspection Methods to Focus on Interest Rate Hikes and COVID-19 Risks

[Asia Economy Reporter Song Seung-seop] The Financial Supervisory Service (FSS) announced on the 2nd that it has prepared the "2022 Inspection Work Operation Plan," which includes the annual basic inspection directions and key inspection items.

With the restructuring of the financial supervision system, periodic risk assessments called "regular inspections" and timely sector-specific responses called "ad-hoc inspections" will be implemented. This year, a total of 779 inspections are scheduled, including 30 regular inspections and 749 ad-hoc inspections (507 on-site inspections and 242 document inspections). This is 274 inspections (54.3%) more than last year's inspection performance.

Regular inspections are conducted considering the characteristics, size, and market influence of financial companies. They are generally carried out every 2.5 to 5 years. However, even small companies with less need for regular inspections may be included if significant risk factors are identified during ad-hoc inspections, ensuring that all financial companies can be subject to regular inspections.

The FSS plans to examine the actual conditions in preparation for potential risk factors such as asset price adjustments due to this year's interest rate hikes. It will also strengthen checks on risk management in vulnerable sectors due to the prolonged COVID-19 pandemic and focus on internal controls and cyber risk prevention in digital finance and big tech. Compliance systems with the Financial Consumer Protection Act and non-face-to-face business systems will also be inspected.

Following the inspection and sanction innovation plan, the Communication Cooperation Officer system will be launched from this month. Through this, improvements to the management performance evaluation system and the self-audit request system will also be implemented.

Jeong Eun-bo, Governor of the Financial Supervisory Service, emphasized while announcing the operation plan, "The new inspection and sanction innovation plan will be implemented in the inspection field, transforming inspections into preventive and effective ones, enabling active responses to upcoming financial market instability factors."

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