FSS Union Opposes Separation of Financial Consumer Protection Bureau and Establishment of New Agency

Controversy Over Overlapping Duties Between FSS Inspection Bureau and New Financial Consumer Protection Agency
Union Raises Concerns: "Risks of Overlapping Duties and Dispersal of Human Resources"

The labor union of the Financial Supervisory Service (FSS) has voiced opposition to the Lee Jaemyung administration's plan to separate the Financial Consumer Protection Bureau and establish a new Financial Consumer Protection Agency.

On July 11, FSS union leader Jung Yuseok and deputy leader Kwak Inhwan distributed a statement titled "We Oppose the Establishment of a Financial Consumer Protection Agency That Undermines Financial Consumer Protection."

The union stated, "The FSS labor union is strongly opposed to the plan to separate the Financial Consumer Protection Bureau as an independent organization from the FSS," explaining, "The current system, which keeps the Financial Consumer Protection Bureau within the FSS, creates outstanding synergy effects."

The union argued that there is no connection between the discussion of separating the Financial Consumer Protection Bureau and past incidents of financial consumer harm. They claimed that the fundamental causes of incidents such as the savings bank crisis, the suspension of private equity fund redemptions, and the Hong Kong equity-linked securities (ELS) incident stemmed from structural problems in which policy and supervisory functions are mixed within a single institution, rather than from the separation of the Financial Consumer Protection Bureau.

The union said, "The best way to further enhance financial consumer protection is to establish the 'functional independence' of the Financial Consumer Protection Bureau within the current supervisory system and to put in place effective 'checks and balances.'"

The union explained that the current supervisory system achieved a settlement rate of over 96% for victims during the Hong Kong ELS incident. They argued that, given the strong crisis response capabilities of the current integrated supervisory system, there is no need to create the potential for weakened crisis response and accountability by separating the Financial Consumer Protection Bureau.

As the Lee Jaemyung administration considers separating the Financial Consumer Protection Bureau from the FSS and establishing a new Financial Consumer Protection Agency, whether to grant the new agency investigative authority has emerged as a key issue. This is because granting such authority could lead to overlap with the investigative departments within the FSS's banking, insurance, small and medium finance, financial investment, and disclosure bureaus.

Regarding this, the union stated, "If the Financial Consumer Protection Bureau is separated, there is a risk of typical negative consequences of organizational division, such as the dispersal of supervisory personnel, increased administrative costs, overlapping duties, and evasion of responsibility." They added, "After the United Kingdom separated its supervisory agencies in 2012, it experienced overlapping regulations, supervisory blind spots, and impediments to financial innovation, which led the UK Parliament to reflect on these outcomes."