South Korea’s top financial regulator, the Financial Services Commission (FSC), is poised to be written into history after 17 years, as the government pushes ahead with a sweeping reform to elevate the supervisory authority of the nation’s financial system.
The country’s governing Democratic Party decided at a general policy meeting on Wednesday to propose to the government a merger of the FSC with the Financial Supervisory Service (FSS), the country’s financial watchdog.
For the merger, the FSC would hand over its financial policy functions to the Ministry of Economy and Finance and be reorganized as an administrative supervisory body under a new name, the Financial Supervisory Commission, according to the Democratic Party.
Under the proposal, the current FSS would continue day-to-day oversight, while carving out its consumer protection unit into an independent watchdog empowered to enforce disciplinary actions.
Kim Nam-geun, the Democratic Party’s deputy floor leader for livelihood affairs, said the creation of the new supervisory commission will require amendments to the Act on the Establishment of the Financial Services Commission, as well as other laws, including the bank-related law.
The Ministry of Economy and Finance is also expected to undergo major restructuring.
Its budget planning functions could be transferred to a new Planning and Budget Office, leaving the ministry to focus on fiscal and financial policy.
(Graphics by Daeun Lee) The reform is part of the government’s efforts to enhance financial oversight.
“This is not about abolishing the FSC but about reinforcing its supervisory role,” said Kim.
INTO HISTORY AFTER 17 YEARS
If the FSC is closed and folded into the new supervisory commission, it would mark the closure of the current commission after 17 years of its service.
The FSC was created in 2008 as part of a government reorganization that shifted the Finance Ministry’s financial policy bureau to the commission.
In the same year, the ministry assumed budget-planning authority from the now-defunct Ministry of Planning and Budget in response to growing calls to manage economic and tax policies, as well as fiscal strategies together.
The Democratic Party said it plans to finalize its reform blueprint on Sunday, after consultations with the government, and submit it to the National Assembly on Sept. 25 for a vote.
The restructuring is expected to extend beyond financial authorities to include restructuring of other state departments, including the Prosecutors’ Office, the Ministry of Trade, Industry and Energy and the Ministry of Environment.
Write to See-Eun Lee and Hae-Ryon Choi at see@hankyung.com Sookyung Seo edited this article.
