Financial Sector on Edge as President's Close Ally and Progressive Appointed New FSS Governor

New FSS Governor with Civic Group Background Expected to Lead Financial Market Reform
Introduces Himself as "Not an Aggressive Person"
Experience on National Pension Committee Suggests Possible Focus on Capital Market Reform

Lee Chanjin, the newly appointed Financial Supervisory Service Governor, is delivering his inaugural speech at the inauguration ceremony held on the 14th at the Financial Supervisory Service in Yeouido, Seoul. Photo by Yonhap News

The surprise appointment of attorney Lee Chanjin as the new Governor of the Financial Supervisory Service has heightened tension in the financial sector. This is because Governor Lee has primarily been active in progressive civic organizations such as Lawyers for a Democratic Society (Minbyun) and the People's Solidarity for Participatory Democracy, leading to expectations that he will implement policies focused on financial market reform, restoring trust, and strengthening consumer protection.

New FSS Governor with Civic Group Background Expected to Lead Financial Market Reform

According to the financial industry on August 18, major financial companies have been busy analyzing Governor Lee's past career and tendencies since his appointment. The direction of future financial policies and supervision is expected to be determined by Governor Lee's orientation, and financial institutions are now preparing for this.

Born in 1964, Governor Lee passed the bar exam in 1986 and completed the 18th class of the Judicial Research and Training Institute. He has mainly worked in progressive civic organizations, serving as Vice President of Minbyun and Executive Director of the People's Solidarity for Participatory Democracy.

Within the financial sector, there is a sense of surprise regarding this appointment. Many note that Governor Lee lacks extensive experience in the financial industry, making it difficult to assess his background and tendencies. An executive at a domestic financial firm commented, "Governor Lee does not have much experience in the financial sector, so he does not appear to have many close contacts within the industry," adding, "There is considerable uncertainty regarding the future policy direction of the FSS." Another financial industry official remarked, "At this point, information is limited, so it is difficult to make any definitive evaluation of the new governor."

In his inaugural address, Governor Lee expressed a strong commitment to financial market reform. He stated, "All economic actors must be able to participate in innovation and value creation under the trust that fair distribution of returns will be ensured," and added, "A foundation for innovation, where fresh ideas from the market can be realized, must also be established." He further emphasized, "Finance, by its very nature of efficient resource allocation, must be at the center of all these processes."

Another reason for the heightened tension in the financial sector is that Governor Lee is considered a close confidant of President Lee Jaemyung. He was a classmate of President Lee at the Judicial Research and Training Institute, participated together in the Labor Law Society, and more recently, served as President Lee's defense attorney in public election law violation cases, making their close relationship well known. There was even an instance where President Lee borrowed a large sum of 500 million won from Governor Lee, further demonstrating their close friendship.

Since taking office, President Lee has repeatedly emphasized the social responsibility of the financial sector, criticizing banks for profiting from interest rate arbitrage. Given this, it is possible that Governor Lee will place particular emphasis on the practical implementation of these responsibilities.

However, some predict that Governor Lee, who is considered relatively moderate compared to his predecessor Lee Bokhyun, may offer greater predictability than in the past. The previous FSS governor was recognized for his strong drive but became controversial for leading financial policy and supervision ahead of the higher-level Financial Services Commission. Conscious of such controversies, Governor Lee introduced himself to reporters on the 14th by saying, "Some may wonder what kind of monster has arrived, but I am not at all an aggressive person," and added, "There will be no immediate actions that could destabilize the market."

Lee Chanjin, the newly appointed Financial Supervisory Service Commissioner, visited the Financial Supervisory Service press room in Yeouido, Seoul, on the afternoon of the 14th and briefly shared his inauguration thoughts with reporters. Photo by Moon Chaeseok

Experience on National Pension Committee Suggests Possible Focus on Capital Market Reform

Given his past experience, there are expectations that Governor Lee will devote considerable effort to improving the capital market system. He served as a member of the National Pension Fund Management Committee for four years, from 2018 to 2022. During that time, he made significant contributions to the introduction of the stewardship code, which expanded institutional investors' participation in corporate decision-making. He was also known for helping the National Pension Service file representative lawsuits against companies engaging in unfair practices.

In his inaugural address, Governor Lee also stressed the need to establish a fair market order. He stated, "Companies must establish a fair governance structure centered on shareholder value," and added, "We will support the successful implementation of the recently passed amendment to the Commercial Act, so that both controlling and minority shareholders' rights and interests are equally respected." He also declared, "We will respond strictly, with zero tolerance, to any acts that undermine market order and fairness, such as stock price manipulation or abuse of monopoly positions."

In response, the market expects Governor Lee to strongly pursue corporate governance reform. The Korea Corporate Governance Forum commented, "While some may downplay Governor Lee for not being a financial expert, appointing someone from outside the financial bureaucracy or academia, who has no conflicts of interest, could actually be more effective in implementing capital market reform with conviction." The forum added, "Governor Lee should focus on addressing fundamental issues in the capital market, such as establishing fair market order and resolving problems related to controlling shareholders' pursuit of private interests."