[People 人] Jeong Eun-bo, Head of the Financial Supervisory Service... Expectations for Reform with the New 'Financial Expert' Leader

"Each Financial Supervisory Administration Must Be Based on Law and Principles"

[Asia Economy Reporter Park Sun-mi] "A true financial expert has come to lead the Financial Supervisory Service." "It seems we can regain the lost prestige of the FSS."

This is the evaluation of Director Jeong Eun-bo by executives who came out after the first internal executive meeting he chaired since his inauguration on the 10th of this month.

As it was the first executive meeting, attendees expected a formal industry report, but their expectations were off. Director Jeong had a deep understanding of the internal affairs of the FSS as well as the situations across all financial sectors requiring expertise, including banks, insurance, and secondary financial institutions. His strong will and charisma for reforming the FSS reportedly created a tense atmosphere during the business report.

Appointed as the first traditional economic bureaucrat to head the FSS under the Moon Jae-in administration, he is recognized as a financial and economic expert who understands every corner of the financial industry better than anyone else. During his time at the Ministry of Strategy and Finance, he worked in economic analysis, insurance systems, and financial policy divisions, and at the Financial Services Commission, he served as Director-General of the Financial Policy Bureau and Secretary-General, giving him unparalleled insight into the flow and policy direction of the domestic financial industry.

He also has extensive experience in external cooperation activities with major international financial organizations, and having served as Vice Chairman of the Financial Services Commission and Chairman of the Securities and Futures Commission, as well as a negotiator for the Korea-US Special Measures Agreement on Defense Cost Sharing at the Ministry of Foreign Affairs, he is known for his broad understanding of the financial industry and communication skills with other institutions.

These strengths have led to expectations and support for the new FSS chief without significant opposition to this appointment. Even the FSS labor union, which had opposed previous professor candidates for the FSS chief position, has stated it will observe without opposition this time. Voices from the opposition party also express hope for sound financial policies led by a strong financial supervisor.

Redefining the Direction the FSS Should Pursue

▲ Financial supervision based on laws and principles, ▲ harmonious operation of ex-post sanctions and proactive guidance, ▲ strengthening financial consumer protection?these three principles mentioned in Director Jeong’s inaugural speech reflect his determination and conviction to renew the FSS amid a challenging financial environment.

He believes that for the FSS to successfully achieve its objectives of financial market stability, sound management of financial companies, and protection of financial consumers, every aspect of financial supervisory administration must be based on laws and principles. He emphasized that financial supervision should be grounded not only in substantive aspects but also in procedural aspects, ensuring legal stability and protection of trust.

He also mentioned that desirable financial supervision involves preventing incidents in advance through proactive guidance and non-action opinions, rather than relying solely on ex-post sanctions. The FSS should create a trusted financial market through balanced supervision before and after incidents. Furthermore, regarding the Financial Consumer Protection Act, which is scheduled to be fully implemented from September, he plans to focus on checking whether financial companies face compliance difficulties and actively resolving vulnerabilities.

By declaring the intention to redefine the direction the FSS should pursue, the three principles presented by Director Jeong are interpreted as a commitment to differ from the previous direction of the FSS.

Focusing Financial Supervision on Support Rather Than Regulation

Until now, under former FSS chief Yoon Seok-heon’s disciplinary-focused supervisory policy, the FSS was criticized for a squeeze-style, rush-style, and targeting-style supervision, missing both the prevention of financial accidents and protection of financial consumers. After a series of private equity fund scandals, the FSS lost trust from both financial companies and consumers. To improve this, Director Jeong emphasizes active communication with the financial market to understand field difficulties and trends, focusing financial supervision on support rather than regulation.

The discord previously seen between the FSS and the Financial Services Commission is also expected to be resolved, raising hopes for synergy between the two institutions. Since Director Jeong and the newly nominated Financial Services Commission Chairman Ko Seung-beom are classmates from the 28th Administrative Examination and both are economic bureaucrats who have worked in economic and financial ministries, it is widely expected that harmony and synergy will arise from their aligned directions. Director Jeong himself firmly recognizes the FSS’s role as a "provider of financial supervisory services to the private sector."

Appointed about three months after former Director Yoon stepped down on May 7, Director Jeong plans to focus during his term on aligning with the Financial Services Commission’s tasks such as overcoming the COVID-19 crisis, household debt, virtual currencies, and consumer protection. His priorities include financial support for vulnerable groups affected by COVID-19, supervision and management of household debt, finalizing sanctions related to private equity funds, establishing investor protection measures for virtual currencies, and supporting the stabilization of the Financial Consumer Protection Act.

However, the financial environment Director Jeong faces after breaking the leadership vacuum amid welcome and expectations is not simple. He confronts a "perfect storm" financial environment where various risks such as the potential expansion of bankruptcies among marginal companies and self-employed individuals, and price adjustments of assets with bubble concerns, converge simultaneously. He must also respond to the platformization of finance led by big tech, and the expansion and changes in finance such as cryptocurrencies and virtual assets.