FSC Employees Unsettled by Possible Separation and Dissolution of the Organization
Possibility That the Ministry of Finance, Separated from the Ministry of Economy and Finance, Will Absorb the Policy Functions of the FSC
Supervisory Functions May Be Integrated with the FSS and Reorganized into the Financial Supervisory Commission
President Lee Jae Myung is taking the oath of office for the 21st president at the National Assembly in Yeouido, Seoul on June 4, 2025. Photo by Kim Hyun Min
The Lee Jae Myung administration appears poised to undertake a sweeping overhaul of the financial regulatory system for the first time in 17 years, heightening a sense of tension on the ground. As concrete discussions are underway to separate the functions of the Financial Services Commission, which is responsible for financial policy, and reorganize it into the Financial Supervisory Commission, signs of unrest have reportedly emerged among its staff.
Possibility that the Ministry of Finance, separated from the Ministry of Economy and Finance, will absorb the policy functions of the FSC
According to political circles on June 5, the Democratic Party of Korea and the Cho Kuk Innovation Party, among other ruling bloc parties, are discussing a plan to transfer the policy functions of the Financial Services Commission (FSC) to the Ministry of Economy and Finance and to integrate its supervisory functions with the Financial Supervisory Service (FSS) by establishing a new Financial Supervisory Commission. During an election campaign on May 28, President Lee Jae Myung stated, "Currently, domestic financial policy is handled by the FSC and overseas finance by the Ministry of Economy and Finance, but the FSC is mixed up in both policy and supervisory work. There is a need to separate and reorganize these functions," signaling a planned overhaul of the FSC.
Representative Cha Kyugeun of the Cho Kuk Innovation Party submitted amendments to three laws?the Government Organization Act, the Act on the Establishment of the FSC, and the Act on the Operation of Public Institutions?reflecting these changes. The core of the amendments is to separate the budget function from the Ministry of Economy and Finance, establishing an independent Budget Office, and reorganizing the Ministry of Economy and Finance into the Ministry of Finance, which would absorb the policy functions of the FSC and oversee both domestic and international financial policy. The FSC would be reorganized into the Financial Supervisory Commission, focusing on financial supervision and consumer protection. Representative Cha explained the background of the proposal, stating, "Since the FSC has been performing both financial industry and supervisory policy functions, there have been criticisms that financial supervision is being sacrificed for industrial policy."
The current financial regulatory system, established under the Lee Myung Bak administration in 2008, assigns domestic financial policy and supervisory policy to the FSC, while the FSS is responsible for supervisory enforcement. If President Lee's vision and Representative Cha's proposal are realized, the FSC would be dismantled for the first time in 17 years, and the system would likely revert to the pre-2008 Financial Supervisory Commission structure.
FSC employees unsettled by possible separation and dissolution of the organization
As the likelihood of organizational restructuring grows, there is a palpable sense of anxiety among public officials at the FSC and employees of the FSS. In particular, depending on the direction of the reorganization, some FSC officials may be relocated to Sejong City, leading to talk among staff about whether they should start looking for housing in Sejong. A source in the financial sector said, "After President Lee directly stated last month that the FSC needs to be separated, there has been significant unrest within the FSC. Since his election, with the possibility of restructuring the Ministry of Economy and Finance and separating the FSC being raised in earnest, this atmosphere has continued."
The FSS is also experiencing internal unease, as there is a possibility that the Financial Consumer Protection Bureau could be separated to strengthen consumer protection functions. President Lee has pledged to significantly enhance the function and independence of financial consumer protection organizations, thereby strengthening consumer protection. There is speculation that the Financial Consumer Protection Bureau, currently under the FSS, could be separated into the Financial Consumer Protection Agency, with enhanced inspection and supervisory functions. An official from the financial authorities explained, "We are still waiting, as the Democratic Party has not yet presented a concrete reorganization plan, but the anxiety among staff is inevitable."
There is also growing interest in who will be appointed as the new head of the financial authorities following the restructuring. Among those mentioned as possible candidates for the next chief of the financial authorities are Do Gyu Sang, former Vice Chairman of the FSC and former Senior Secretary for Economic Policy at the Blue House during the Moon Jae In administration; Sohn Byung Doo, former Chairman of the Korea Exchange and also a former FSC Vice Chairman; and Kim Yong Beom, former First Vice Minister of the Ministry of Economy and Finance. For the position of FSS Governor, which became vacant with the end of Lee Bok Hyun's term on this day, names being discussed include Kim Byung Wook, former Democratic Party lawmaker, and Hong Sung Kuk, former lawmaker. Kim Eun Kyung, professor at Hankuk University of Foreign Studies Law School and former head of the FSS Financial Consumer Protection Bureau during the Moon Jae In administration, as well as Won Seung Yeon, professor of business administration at Myongji University, are also being mentioned. However, if the timing of the restructuring coincides with the new administration's plans, some appointments may be delayed.
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