FSS Public Institution Designation Decision on the 29th... Deferral Likely

Final Decision Expected at 5 p.m. on January 29
PIMC Has Reviewed Designation Annually Since 2021
Prevailing View Favors Meeting Deferral Criteria

Amid growing attention over whether the Financial Supervisory Service (FSS) will be designated as a public institution, there is increasing speculation that the designation may once again be deferred. Within the government, it is widely believed that the criteria set by the Public Institution Management Committee (PIMC) in 2021, when it postponed the FSS's designation, have been generally well implemented to date.

According to relevant ministries on January 28, the PIMC under the Ministry of Economy and Finance will hold a meeting on January 29 to review the agenda of designating the FSS as a public institution. The committee has scheduled the meeting for 5 p.m. on January 29 to avoid overlapping with the National Assembly plenary session. So far, the prevailing view is that the committee will likely decide to defer the designation of the FSS as a public institution during the meeting.

In 2021, the FSS received a conditional deferral of designation from the PIMC due to its inadequate oversight of private equity funds. At that time, the committee set forth several conditions: ▲ increasing the weight of quantitative indicators in management performance evaluations from the 30% range to around 40%, ▲ strengthening customer satisfaction surveys to the level of public institutions, conducting them annually, and reflecting the results in management evaluations (previously, surveys were conducted irregularly on selected customers), ▲ preparing measures to further streamline the organization, such as additional reductions in senior positions and restructuring overseas offices.

The PIMC has been reviewing the FSS's compliance with the strengthened standards each year since 2021. In its 2022 and 2023 reviews, the committee maintained the previous decision to defer the designation, but stated that it would consider designating the FSS as a public institution if future compliance was deemed insufficient. Although the related agenda was not officially released in 2024 and 2025, internal reviews have continued, focusing on whether the FSS met the existing deferral conditions and on the supervisory environment. A government official explained, "Although there was little external attention in 2024 and 2025 and the agenda was not separately disclosed, we have continued to monitor the FSS's compliance with the conditions."

Since the designation of public institutions is at the discretion of the PIMC, it is expected that the committee will continue to comprehensively review the designation each year, including any contentious issues. While the deferral conditions set in 2021 will remain the basic framework, it is highly likely that newly emerging issues and changes in the supervisory environment will also be considered each year. Discussions on designating the FSS as a public institution resurfaced following the launch of President Lee Jaemyung's administration and its accompanying government reorganization discussions.

Meanwhile, at a scheduled monthly press briefing on the morning of January 28, Financial Services Commission Chairman Lee Eogwon is expected to comment on the issue of designating the FSS as a public institution. According to the Act on the Management of Public Institutions, the PIMC must decide on the designation of a public institution after consultation with the head of the relevant ministry. The FSS is an institution under the guidance and supervision of the Financial Services Commission.

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