April Financial Bill Passage Faces Difficulties Amid LH Aftermath

Seong Il-jong, the secretary of the People Power Party's Political Affairs Committee, and other committee members held a press conference on the Conflict of Interest Prevention Act on the 31st at the National Assembly Communication Office.
[Photo by Yoon Dong-joo]

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[Asia Economy Reporter Song Seung-seop] The National Assembly's Political Affairs Committee is postponing the passage of major financial bills one after another. This is because the committee's attention has been focused solely on the "Public Officials Conflict of Interest Prevention Act" following the real estate speculation scandal involving LH executives. Critics point out that the delay in handling impactful financial legislation is inefficient.

According to officials from the Political Affairs Committee, discussions in the second subcommittee on bill examination held on the 13th and the previous day mainly focused on the Conflict of Interest Prevention Act. At the subcommittee meetings on the 2nd and the 31st of last month, all 12 agenda items presented were related to the Conflict of Interest Prevention Act. No discussions on financial legislation took place. The financial laws under the committee’s jurisdiction passed at the last plenary session of the temporary National Assembly on the 25th were limited to amendments to the Financial Innovation Support Special Act and the Capital Market Act.

The Conflict of Interest Prevention Act is designed to prevent public officials from pursuing private interests using information obtained during their duties, such as financial or real estate information. If they gain private benefits through duty-related information, they are punished or required to return the benefits. The Anti-Corruption and Civil Rights Commission submitted the bill to the National Assembly in 2013, marking the start of serious legislative attempts. Since then, similar bills have been submitted repeatedly by both ruling and opposition parties whenever moral hazards among public officials surfaced, but they have been repeatedly discarded automatically.

Discussion on the Conflict of Interest Prevention Act accelerated when allegations arose that LH executives engaged in real estate speculation using information obtained through their duties. It was expected to be passed in the March National Assembly session, and Political Affairs Committee officials anticipated that discussions on financial bills would begin from next month (April). However, the process was stalled due to the need for “thorough examination,” and discussions have continued up to now.

An official from the Political Affairs Committee explained, “Because the proposed bills are highly contentious with many issues, the process is taking longer than expected,” adding, “It also takes time to coordinate multiple bills proposed by the government and various lawmakers into one.”

Public hearing on the amendment to the Electronic Financial Transactions Act held at the plenary session of the National Assembly's Political Affairs Committee in December last year
[Photo by Yoon Dong-joo]

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As a result, the likelihood of major amendments such as the Electronic Financial Transactions Act (EFTA) and the Social Solidarity Fund Act being presented has further diminished. The EFTA amendment includes the introduction of new licenses for MyPayments operators and comprehensive payment settlement operators, as well as rationalization of entry regulations. The Financial Services Commission and the Bank of Korea are disputing the establishment of a “clearing business for electronic payment transactions” to ensure transparent fund transactions for fintech companies. Despite being a law aimed at organizing and fostering the digital financial industry, its schedule keeps being pushed back.

The Social Solidarity Fund Act, which establishes a public fund through mandatory government contributions and voluntary private donations, also faces an uncertain processing schedule. The fund is intended to support vulnerable groups affected by large-scale disasters and has been referred to as a COVID-19 profit-sharing system. Banks are mentioned as potential contributors to the fund.

Professor Kim Dae-jong of the Department of Business Administration at Sejong University pointed out, “If the Political Affairs Committee keeps postponing the passage of financial laws, it increases legislative uncertainty for financial companies,” adding, “It also creates problems for the public and self-employed individuals who find it difficult to receive timely relief from damages caused by COVID-19.”

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