Financial Services Commission to Be Dismantled After 17 Years... Financial Consumer Protection Agency to Be Separated from Financial Supervisory Service (Comprehensive)

High-Level Party-Government Meeting Announces Government Reorganization Plan
Domestic Financial Policy Functions Transferred from the Financial Services Commission to the Ministry of Finance and Economy
Financial Consumer Protection Agency Separated from the Financial Supervisory Service

Yoon Hojung, Minister of the Ministry of the Interior and Safety, and Han Jungae, Policy Committee Chair of the Democratic Party of Korea, are announcing the results of the 3rd High-Level Party-Government Consultation and the government organization reform plan at the Government Seoul Office Building in Jongno-gu, Seoul, on the 7th. Photo by Yonhap News

The Financial Services Commission, which has overseen domestic financial policy, will effectively be dismantled. The domestic financial policy functions previously handled by the commission will be transferred to the Ministry of Finance and Economy, which will be separated from the Ministry of Economy and Finance. Supervisory functions will be assigned to the newly established Financial Supervisory Commission. The Financial Consumer Protection Bureau, which was under the Financial Supervisory Service, will be separated and become the Financial Consumer Protection Agency.

On the afternoon of September 7, the Democratic Party of Korea and the government held a high-level party-government consultation at the Prime Minister's official residence in Seoul and announced this government organization reform plan. The key points of the financial sector reform include the separation of the Ministry of Economy and Finance and the dismantling of the Financial Services Commission. The party and the government agreed to separate the budget function from the Ministry of Economy and Finance and establish it as an independent Budget Office. The Ministry of Economy and Finance will be reorganized into the Ministry of Finance and Economy, and the domestic financial policy functions of the Financial Services Commission will be incorporated into it. The remaining organization of the Financial Services Commission will be renamed the Financial Supervisory Commission and will be responsible for financial supervision and consumer protection.

The Financial Consumer Protection Bureau, currently under the Financial Supervisory Service, will be separated and established as the Financial Consumer Protection Agency. This organization will be dedicated to financial consumer protection, a priority continuously emphasized by the Lee Jaemyung administration. The Financial Supervisory Commission will also oversee both the Financial Supervisory Service and the Financial Consumer Protection Agency. The positions of Chair of the Financial Supervisory Commission and Governor of the Financial Supervisory Service will not be held concurrently.

The organizational size of the new Financial Supervisory Commission has yet to be determined. Lee Changgyu, Director of the Organization Bureau of the Ministry of the Interior and Safety, stated, "We need to separate the financial policy and supervisory functions within the Financial Services Commission. Until the Government Organization Act is proposed and finalized, we will coordinate these matters with the commission." The operational plans for financial public enterprises under the Financial Services Commission have also not yet been decided. If nominee Lee Eokwon passes the confirmation hearing, he is likely to be appointed as Chair of the Financial Supervisory Commission.

The Financial Supervisory Service and the Financial Consumer Protection Agency are expected to be designated as public institutions. Director Lee explained, "The Financial Supervisory Service has not been subject to much external oversight compared to its role so far. Once it is designated as a public institution, it will be evaluated in various areas, such as management and finance, which will ensure more effective oversight."

The Democratic Party of Korea plans to process the revised Government Organization Act, which includes these changes, at the National Assembly plenary session on the 25th. If the revised act passes the National Assembly, the Financial Services Commission will be dismantled for the first time in 17 years since its establishment in 2008. Afterward, government organizations responsible for the financial sector will be divided into four entities: the Ministry of Finance and Economy, the Financial Supervisory Commission, the Financial Supervisory Service, and the Financial Consumer Protection Agency.