[Accountability Structure Dilemma] ③ Systems Already Adopted Overseas... Calls for "Differentiated Regulation"

The UK, Australia, and Singapore Introduced the Accountability Map
Korea Also Benchmarks Advanced Systems
Calls Grow to Ease Regulations for Small and Less-Resourced Companies

Editor's NoteSince this year, the introduction of the 'Accountability Map' in the financial sector has heightened tension within the industry. The Accountability Map is a system where each executive of a financial company clearly defines the scope and content of their internal control responsibilities. The government established this system as a preventive measure in response to recurring financial accidents, but in the field, there are concerns about increased responsibility burdens and disciplinary fears. There is also a significant fear that a single small mistake could lead to losing one's position. This special report examines the background and current status of the Accountability Map's introduction and explores improvement directions to establish the system more efficiently and rationally.

The Accountability Map was introduced earlier in some advanced countries such as the United Kingdom, Australia, and Singapore than in South Korea. Korea referred extensively to these cases when introducing the system. However, unlike Korea, foreign countries differentiated the responsibilities imposed on large financial companies and small to medium-sized financial companies, thereby reducing the burden on smaller companies. It is advised that Korea should consider these cases once the system is established.

The UK First Introduced the Accountability Map, Korea Also Takes Reference

According to the financial sector and the Korea Insurance Research Institute on the 8th, the first country in the world to introduce the Accountability Map was the United Kingdom. The UK experienced major financial crises such as the 2008 global financial crisis and the 2012 LIBOR interest rate manipulation scandal, which made it realize the necessity of strengthening internal controls in financial companies. The UK's Financial Conduct Authority (FCA), after several years of preparation, first introduced the Senior Managers and Certification Regime (SM&CR) in 2016, which imposes higher accountability on senior executives of financial companies. The system was initially introduced mainly in large banks and has now expanded to the entire financial sector.

Under SM&CR, senior managers of UK financial companies must meet eligibility requirements and obtain prior approval before appointment. To clarify areas of responsibility, financial companies allocate responsibilities to each senior manager and document them in responsibility statements, which are shared with financial supervisory authorities. The Korean government is known to have referred to these aspects of the UK system when creating the Accountability Map.

Australia also referred to the UK system and started the Bank Executive Accountability Regime in 2018, and since last year, has been implementing a financial accountability regime applicable across the financial industry. Australia's financial accountability regime is similar to the UK's Senior Managers and Certification Regime, identifying senior executives with high-level executive responsibilities for management and control of financial companies, registering them with financial supervisory authorities, and using responsibility statements and accountability maps to clarify the responsibilities allocated to senior executives.

Singapore's Individual Accountability Regime has been implemented since 2021 under guidelines from the Monetary Authority of Singapore. Singapore adopts a so-called 'outcomes-based approach' and presents five outcomes that financial companies must achieve. For example, the detailed guidelines for Outcome 1 illustrate the scope of target executives (core functions) and provide criteria for identification, while the detailed guidelines for Outcome 3 stipulate documenting the roles and responsibilities of senior managers and the overall management structure of financial companies, ensuring timely reflection of significant changes.

Korea Applies Uniform Regulation to All Financial Companies, Calls for More Flexibility

Korea introduced the Accountability Map last year and is currently implementing it in stages according to the size of financial companies. Unlike other countries, Korea applies the system to all financial companies and does not apply differentiated regulations based on company size, such as assets or number of employees.

In contrast, the UK applies regulations differently depending on the company's asset size and type. For example, small insurance companies are exempt from the obligation to prepare and submit accountability maps, and the scope of target executives is limited. Singapore also applies the achievement of the five outcomes regardless of company size, but financial companies with 50 or more employees are generally required to follow the detailed guidelines of the framework, whereas smaller financial companies with fewer than 50 employees are not, allowing for flexible application.

There are calls in Korea to introduce flexible regulations based on company size, similar to the UK and Singapore. Small financial companies often struggle to establish proper internal control systems like large financial companies due to lack of personnel or funds, and applying the same regulations raises fairness issues. Yang Seung-hyun, a research fellow at the Korea Insurance Research Institute, stated, "If the Accountability Map is not applied differentially, there is a risk that disproportionate regulatory burdens and excessive costs will adversely affect the operation or market entry of small financial companies," and added, "During the process of establishing the system, active discussions on differentiated regulatory measures are necessary."