"Stop Riding the Business Wave, Directors"…Financial Supervisory Service Tightens Belt

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The Financial Supervisory Service (FSS) has significantly reduced various welfare benefits. This move comes as the annual contribution of 10 billion KRW from the Bank of Korea has recently been halted, prompting the FSS to tighten its belt.

According to financial authorities on the 15th, the FSS revised its salary, travel expenses, and welfare regulations on the 18th of last month. Regarding domestic and international travel expenses, support benefits have been reduced for employees at the department head and division chief levels or below. At the FSS, department heads and division chiefs are senior positions below deputy governors and deputy deputy governors, including directors, division chiefs, support chiefs, and heads of overseas offices.

Until now, the FSS reimbursed airfare for department heads and division chiefs based on business class prices. Going forward, reimbursements will be based on economy class fares. International travel expenses have also been adjusted from business to economy class. Previously, railway fares for employees from department head and division chief levels down to grade 4 employees were reimbursed at first-class rates, but now they must use second-class, the same as regular employees. However, benefits for the FSS Governor, auditors, deputy governors, deputy deputy governors, and professional review committee members?who receive travel expenses based on actual costs without separate standards?remain unchanged.

The scale of accommodation expenses paid for business trips and overnight work has also been reduced. The daily accommodation allowance for department heads and division chiefs, previously between 95,000 KRW and 120,000 KRW, has been limited to between 85,000 KRW and 108,000 KRW. For team leaders and employees at grades 1, 2, and 3, the allowance has been cut from 80,000?100,000 KRW to 72,000?90,000 KRW, and for other ranks, from 60,000?80,000 KRW to 54,000?72,000 KRW.

Employee welfare benefits have also been reduced or additional payment clauses removed from the regulations. Scholarship support previously provided to university students who were children of employees who died in the line of duty is now limited to middle and high school students only. The clause allowing a one-year disaster relief payment to bereaved families facing hardship due to an employee’s death has also been deleted. Insurance premiums and maintenance costs that the FSS previously covered for rental housing, when employees lived outside official dormitories, must now be paid directly by the employees.

In the salary section, compensation for employees on leave has been eliminated. Initially, the FSS had regulations to pay 25?30% of the base salary to employees on petition leave, family care leave, or parental leave. However, a special provision allowed this to be gradually reduced to about 5?10% between 2024 and 2026. The special retirement allowance for those who retired or died due to work-related injuries or illnesses has also been abolished.

The reduction in welfare benefits is closely linked to budget issues. The Bank of Korea recently stopped its annual contribution of 10 billion KRW to the FSS. To compensate, the supervisory fees collected from financial companies would need to be increased, but this is not easy. Supervisory fees are a major source of funding for the FSS, and increasing them requires approval from the government (Financial Services Commission), which holds budget authority.

An FSS official explained, "Although we are not a public institution, we fulfill obligations equivalent to one," adding, "The Financial Services Commission demands that our operations and various benefits be at the level of a public institution." If welfare costs are high, the FSS, despite not being a public institution, could face criticism for lax management. A representative example is the reduction in welfare benefits that began after the 2014 ‘Guidelines for Normalizing Lax Management in Public Institutions.’

Discontent among FSS employees is growing. One employee said, “Internal bonuses and other benefits are continuously being cut,” and added, “Many now feel that they receive no welfare benefits at all.”

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