[Political Affairs Committee Report] Financial Supervisory Service "Internal Control Improvement Plan to be Prepared by October"

Financial Supervisory Service Governor Lee Bok-hyun is attending the full meeting of the Political Affairs Committee held at the National Assembly on the 28th and delivering a greeting. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Song Hwajeong] The Financial Supervisory Service (FSS) will present an internal control improvement plan in October in response to the recent continuous financial accidents such as embezzlement. The internal control standards for preventing financial accidents are expected to be further strengthened. Additionally, the enactment of the Financial Product Comprehensive Brokerage Act will be pursued to ensure effective regulation of big tech companies.

On the 28th, the FSS announced these plans during a report to the National Assembly's Political Affairs Committee. Lee Bokhyun, Governor of the FSS, stated, "Due to the recent series of financial accidents in the banking and financial sectors, there is growing concern that customer trust, the lifeblood of the financial industry, may be damaged. The FSS will promptly prepare effective internal control improvement measures based on related inspections and on-site assessments."

The FSS has drafted improvement tasks for the banking sector based on the inspection results of the Woori Bank embezzlement case and the on-site assessment of accident prevention functions. This draft includes three major strategic tasks: ▲ strengthening the effectiveness of internal control standards ▲ expanding the capabilities of compliance monitoring departments ▲ improving supervision and inspection methods.

First, to strengthen the effectiveness of internal control standards, the FSS plans to enhance the management system for long-term employees and establish detailed standards to improve the effectiveness of accident prevention measures, while also improving work processes to block financial accidents. Specifically, it will establish personnel management standards for long-term employees and introduce a reporting obligation for the debt and investment status of employees at risk of accidents. The scope of the mandatory leave system will be expanded and its enforcement strengthened, and joint fund management verification by creditors will be made mandatory. Controls at each stage of fund withdrawal will also be reinforced.

To expand the capabilities of compliance monitoring departments, the FSS plans to strengthen the qualifications for compliance officers by adding relevant work experience requirements and propose minimum staffing standards for each bank.

To strengthen supervision and inspection, the internal control section will be separated as an independent evaluation item during management performance evaluations, and the weight of internal control evaluations will be increased by linking internal control evaluation grades with overall grades. On-site inspections at branches, such as surprise cash inspections, will be expanded in cases of large-scale financial accidents. Furthermore, to strengthen management responsibility for internal control, discussions will continue on amending the Corporate Governance Act.

The FSS plans to finalize the internal control improvement plan in October after collecting industry opinions on the strategic tasks. For other financial sectors, the FSS intends to prepare internal control improvement measures within this year, considering the discussions in the banking sector and the characteristics of each sector.

For rational regulation of big tech companies, the FSS will promote the enactment of the Financial Product Comprehensive Brokerage Act (tentative name) and the disclosure of big tech commission fees. First, in the second half of this year, the FSS will push for the enactment of the Financial Product Comprehensive Brokerage Act to apply the principle of same function, same regulation to digital financial platforms, providing consumers with opportunities to select suitable financial products through comparison and recommendation of various financial products. Alongside this, considering criticisms that the simple payment fees of electronic financial operators such as big tech are higher than those of card companies, placing a burden on small business owners, the FSS plans to establish guidelines and promote fee disclosure.

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