Personnel Exchanges Legislated, but FSS Worries About "Dispatch Work" With New Financial Consumer Protection Agency

Although the Proposed Amendment Specifies "Personnel Exchanges,"
Concerns Remain Over "Dispatch Work" If the Financial Consumer Protection Agency Is Established as a Separate Corporation
Criticism Mounts: "Both the Rationale and Practical Benefits o

Concerns are mounting within the Financial Supervisory Service over the potential for staff to be assigned to the newly established Financial Consumer Protection Agency. Although the bill to establish the Financial Supervisory Commission, proposed as a party platform by Kim Byungki, floor leader of the Democratic Party, specifies the authority to allow "personnel exchanges" rather than "dispatch work," discontent among Financial Supervisory Service employees remains high. Some have expressed concerns that "once dispatched to the Financial Consumer Protection Agency, it may be difficult to return to the Financial Supervisory Service."

Financial Supervisory Service Headquarters, Yeouido, Yeongdeungpo-gu, Seoul. Financial Supervisory Service

According to the financial sector on September 17, the recently proposed bill by the Democratic Party includes provisions allowing personnel exchanges between the Financial Consumer Protection Agency and the Financial Supervisory Service. However, internal unrest continues within the Financial Supervisory Service. At a closed-door briefing on September 8, Senior Deputy Governor Lee Sehoon stated, "The basic principle is to allocate staff based on the current situation when implementing organizational changes." Employees have interpreted this as implying that staff currently belonging to the Financial Consumer Protection Bureau may be transferred to the new agency.

Article 67-3, Paragraph 2 of the revised bill specifies, "The Governor of the Financial Supervisory Service and the Head of the Financial Consumer Protection Agency may conduct personnel exchanges between their staff if necessary." In contrast to Article 65 of the same law, which stipulates that the Financial Supervisory Commission and the Ministry of Economy and Finance may "order dispatch work" for cooperation, the word "dispatch" is not used here. Nevertheless, Financial Supervisory Service employees believe that if the Financial Consumer Protection Agency is established as a separate entity, it will likely operate in a manner akin to dispatch work rather than a true rotation system.

There have also been reports that some of the candidates being considered for the head of the new agency and certain political circles have argued for the need to establish the Financial Consumer Protection Agency as a separate legal entity. The Ministry of the Interior and Safety has also drawn a clear line, stating that the agency is a separate organization from the Financial Supervisory Service. On September 7, after a high-level party-government consultation, Lee Changgyu, Director of Organization at the Ministry of the Interior and Safety, referred to the Financial Consumer Protection Agency and the Financial Supervisory Service as "separate institutions."

A Financial Supervisory Service official commented, "In the past, the Bank Supervision Office within the Bank of Korea was also a separate organization, but under the leadership of the HR team, staff rotations were carried out within the single framework of the Bank of Korea. Even if the Financial Consumer Protection Agency is separated from the Financial Supervisory Service as envisioned by politicians, there is no need to transfer Financial Supervisory Service employees to the new agency."

Another source of dissatisfaction is that, following the organizational restructuring, significant portions of inspection and sanction authority must be transferred to the Financial Supervisory Commission and the Financial Consumer Protection Agency. The Financial Supervisory Commission will assume the authority to impose sanctions of "reprimand warning" or higher on executives of financial institutions such as banks and insurance companies. The Financial Consumer Protection Agency will also receive substantial authority over inspections and sanctions related to the sale and advertising of financial products, and the Financial Supervisory Service will be required to participate in joint inspections upon request from the new agency. Employees of the Financial Supervisory Service worry that this will weaken their inspection authority and work capabilities, and may also complicate career management.

There is also criticism that the Democratic Party's justification of "separating policy and supervision" is not being met. Critics argue that, in effect, only the Financial Supervisory Service is being separated. In the financial sector, there is talk that "more than 100 Financial Services Commission employees will remain at the Financial Supervisory Commission." This could result in a large number of Financial Services Commission officials joining the new organization, undermining the intended separation of policy and supervision.

A Financial Supervisory Service official noted, "Incidents like the credit card crisis and private equity fund scandals occurred because the 'accelerator' of policy and the 'brake' of supervision did not function properly. Although politicians have used these cases as justification to pursue the separation of policy and supervision, separating the Financial Consumer Protection Bureau into the new agency while a significant number of Financial Services Commission employees remain at the Financial Supervisory Service is inconsistent with the original intent of separating policy and supervision."