[Exclusive] "Saemaeul Geumgo Also Supervised by Financial Authorities" Legislative Amendment Proposed

The financial authorities are pushing for a revision of the law to allow supervision of Saemaeul Geumgo. Amid rising public anxiety over the crisis rumors surrounding Saemaeul Geumgo, this move aims to eliminate the 'supervisory blind spot' of Saemaeul Geumgo, the only mutual finance institution supervised by the Ministry of the Interior and Safety.

According to the National Assembly and financial circles on the 9th, a partial amendment bill to the Saemaeul Geumgo Act containing such provisions is being prepared mainly by members of the Democratic Party of Korea. The bill is proposed by Kang Byung-won, the opposition whip of the National Assembly's Administrative Safety Committee and a member of the Democratic Party, with Hong Sung-guk, also from the Democratic Party, co-leading the effort. Especially since the Saemaeul Geumgo issue has emerged as a cross-government problem, the plan is to persuade ruling party lawmakers to join the proposal and push the bill forward together.

Under Article 74 of the current Saemaeul Geumgo Act, the Minister of the Interior and Safety supervises the credit and mutual aid businesses of Saemaeul Geumgo in 'consultation' with the Financial Services Commission. Unlike other mutual finance institutions such as Nonghyup, Shinhan Credit Cooperative, and Suhyup, which are directly supervised by financial authorities, Saemaeul Geumgo has no direct authority for the Financial Supervisory Service to conduct inspections unless requested by the Ministry of the Interior and Safety, leading to ongoing concerns about inadequate supervision. Particularly, with the recent surge in delinquency rates and other issues coming to light, questions have even been raised about the Ministry of the Interior and Safety's expertise in supervision.

According to a draft amendment obtained by Asia Economy, the core of the proposal is to empower the Financial Services Commission to supervise the credit and mutual aid businesses of Saemaeul Geumgo and issue necessary orders as prescribed by presidential decree. Additionally, the phrase 'the Minister of the Interior and Safety may request support from the Financial Supervisory Service Commissioner when necessary to inspect Saemaeul Geumgo or its central association' has been strengthened to 'must request an inspection of Saemaeul Geumgo or its central association.'

Furthermore, matters related to accounting, which were previously stipulated in enforcement ordinances, have been included in the law. Each accounting business sector is to be defined by the articles of association, but the general accounting of regional Saemaeul Geumgo must be divided into credit business and non-credit business sectors. Saemaeul Geumgo is required to complete the settlement of accounts for each business year within two months after the end of the business year and prepare a settlement report to be approved by the general meeting.

There is already a Saemaeul Geumgo Act amendment bill proposed by Democratic Party member Lee Hyung-seok in 2021, which transfers supervisory authority over credit businesses to the Financial Services Commission, but it has remained dormant without much discussion. If the current proposal is pushed forward centered on the Administrative Safety Committee whip, Lee’s bill is expected to be absorbed and discussed together. Especially as the recent Saemaeul Geumgo incident has brought the Ministry of the Interior and Safety’s supervisory shortcomings to light, the bill’s discussion is likely to gain renewed momentum.