Deloitte Korea Financial Services Publishes Commentary on the Financial Company Governance Act

"In Step with the Paradigm Shift in Financial Company Governance"
Covering Key Issues of Next-Generation Financial Sector Governance

The Financial Services sector (One FSI) of Deloitte Korea has published a commentary that, for the first time among accounting firms, offers a comprehensive interpretation of the Financial Company Governance Act and practical guidelines for its application.

According to Deloitte Korea on June 23, the book "Financial Company Governance Act," co-authored by Sunho Kim, Partner at Deloitte Korea's Financial Services sector, and Professor Sangbok Lee of Sogang University, is a comprehensive interpretation of the increasingly stringent governance regulations for financial companies since the Act's implementation in 2016. The book goes beyond article-by-article commentary, serving as a practical manual that organically integrates statutes, enforcement decrees, supervisory regulations, and case law.

This commentary reorganizes and explains all areas of the Governance Act?from board composition and operation, to executive qualifications, internal control standards, major shareholder eligibility screening, and sanction procedures?by practical functional units. In particular, it attempts an integrated approach to bridge the gap between legal provisions and practical realities, moving away from a fragmented, article-centric interpretation.

The financial industry is paying attention to the fact that the scope of the Governance Act is expanding beyond its traditional boundaries. As the adoption of artificial intelligence (AI)-based internal control systems accelerates, there is growing discussion that boards of directors and audit committees must function as oversight and accountability bodies for algorithm design principles and data processing ethics. AI technology is increasingly used as a core control tool for abnormal transaction detection, early warning of regulatory violations, and automated document review. Consequently, the legal structuring of the "separation of design responsibility and outcome responsibility" is emerging as a new governance issue.

The commentary also highlights the trend of compliance functions being integrated at the board level as part of enterprise-wide risk management, rather than merely post-event review. Supervisory authorities are demanding the strengthening of compliance officers' independence, the internalization of compliance management based on enterprise-wide roles and responsibilities, and the establishment of proactive compliance risk response systems linked to internal controls.

One distinguishing feature of this commentary is its inclusion of explanations on the accountability structure introduced under the amended Financial Company Governance Act, which was revised to systematically manage the duties of financial company executives. This section reflects most of the Financial Services Commission's authoritative interpretations, following several meetings with Hyungsoo Jang, Deputy CEO of the Deloitte Accountability Structure Support Center, Gyudong Lim, Managing Director, and Sunho Kim, Partner.

Sunho Kim, Partner, stated, "As governance regulations in the financial industry converge with next-generation issues such as AI, compliance management systems, and consumer protection, there is a growing need for multidimensional and strategic interpretation capabilities that go beyond traditional normative analysis." He added, "We expect this commentary to serve as a practical guideline for responding to these changes."