After Leaving Financial Authorities... Financial Services Commission as Insurers, Financial Supervisory Service as Law Firms

40% of 10 Retirees from Financial Services Commission Move to Insurance Companies
32.4% of Financial Supervisory Service Staff Join Law Firms, with 6 at Gwangjang
Concerns Over Former Regulators Becoming Shields for Private Firms
Rep. Kim Sung-joo: "Urgent Need to Improve Reemployment Screening System"

[Asia Economy Reporter Song Seung-seop] It has been revealed that retirees from the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) have chosen different career paths over the past two years. While many FSC retirees moved to the insurance industry, FSS retirees mostly settled in law firms. This is interpreted as a strategy by financial companies and law firms to secure favorable policies and prevent unfavorable lawsuits.

According to data submitted by the FSC and FSS to the office of Kim Sung-joo, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, 84 people applied for employment screening over the past two years. Ten applicants were from the FSC, and 74 were from the FSS. For employees at grade 4 or higher, the FSC and FSS require approval from the relevant Public Officials Ethics Committee to work at restricted institutions after retirement.

Within the FSC, four people moved to the insurance industry, representing the largest share. A secretary-level employee transferred to the Life Insurance Association on June 4, 2020, and on February 1 last year, another secretary-level employee moved to Samsung Fire & Marine Insurance as an executive director. The following month, a deputy director-level employee immediately became an executive director at the General Insurance Association, and on December 1 last year, a secretary-level employee became an executive director at Hanwha Life Insurance. Although a former FSS official, former FSS Governor Jung Eun-bo was also appointed as a research advisory committee member at the Insurance Research Institute just two months after his retirement.

Typically, high-ranking FSC officials often move to large law firms. Former FSC Chairman Kim Seok-dong served as an advisor at the law firm Jipyung, former Chairman Shin Je-yoon at the law firm Bae, Kim & Lee, and former Chairman Lim Jong-ryong at the law firm Yulchon. However, as the insurance industry faces numerous unresolved issues, it has actively recruited former financial authorities with expertise to devise countermeasures, changing the trend of FSC retirees' career moves.

The insurance industry must prepare for the full implementation of the new International Financial Reporting Standard (IFRS17) next year. IFRS17 requires insurance liabilities to be measured at fair value rather than cost, which could increase the burden on insurers to maintain capital adequacy ratios. The introduction of the new solvency regime (K-ICS) is also a pressing issue. This system evaluates insurers' solvency standards, increasing capital requirements and necessitating countermeasures.

On the other hand, many retirees from the FSS still prefer law firms. Among the 74 retirees, 24 (32.4%) moved to law firms, the largest share. Kim & Chang law office had the most with eight, followed by Kwangjang (6), Bae, Kim & Lee (3), Yulchon (3), Sejong (2), HwaWoo (1), and Minju (1), mostly large law firms. However, a grade 3 employee who retired from the Anti-Money Laundering Office in March this year attempted to move to Bae, Kim & Lee but was restricted due to close relevance to their previous duties.

Law firms prefer former financial authorities because private financial companies increasingly seek legal advice in financial matters. In recent years, disputes related to high-risk products such as private equity funds have increased in the financial sector, and CEOs frequently appear in court due to sanctions. The revival of the Financial and Securities Crime Joint Investigation Unit by the new government has also created an atmosphere of intensified financial investigations and trials. The unpredictable regulatory changes surrounding virtual assets and non-fungible tokens (NFTs) are also factors.

Consequently, law firms have begun competing to recruit former FSC and FSS officials. Former FSC Chairman Choi Jong-gu, who served as the FSS Senior Deputy Governor before leading the FSC, received multiple offers from large law firms. Some firms reportedly sent their lead attorneys to persuade him personally. Choi is scheduled to serve as an advisor at the law firm HwaWoo starting on the 13th.

Concerns have been raised about the movement of financial authorities' retirees to law firms. Critics argue that former regulators become shields for private financial companies after retirement. Kim Sung-joo of the Democratic Party stated, “Research shows that when financial authorities' personnel are hired, the probability of financial companies being sanctioned decreases by 16.4%,” and criticized, “It is urgent to improve the reemployment screening system to ensure fairness in public duties and prevent conflicts of interest between public and private interests.”

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