[1mm Finance Talk] "Only the Governor Can Be Trusted"... FSS Faces a Fateful Week on Public Institution Status

Lukewarm Response from Ministry of Economy and Finance, Deepening Conflict with Financial Services Commission
Desperate Need for Allies, but Special Judicial Police Move Backfires
Situation Worsening... "Opposition to Supervisory-Over-Supervisor

Within the Financial Supervisory Service (FSS), there is a growing sense of unrest as the decision on whether to re-designate the FSS as a public institution approaches at the end of this month. Some are now suggesting that it may be time to accept the re-designation. Although Lee Chanjin, Governor of the Financial Supervisory Service, has publicly stated that the “supervisory-over-supervisory” structure-where the FSS is managed not only by the Financial Services Commission but also by the Ministry of Economy and Finance-is undesirable, it is reported that he is struggling to persuade both ministries. Some observers even suggest that the situation has deteriorated further compared to earlier this month, especially as controversy over the FSS’s special judicial police (SJP) investigative authority and escalating conflict with the Financial Services Commission have intensified.

Lee Chanjin, Governor of the Financial Supervisory Service, is delivering a New Year's address at the '2026 Pan-Finance New Year's Meeting' held at Lotte Hotel in Jung-gu, Seoul, on the afternoon of the 5th. 2026.1.5 Photo by Kang Jinhyung

According to the financial sector on January 26, there are concerns within the FSS that it may have run out of both justification and means to prevent its re-designation as a public institution. Some point out that Governor Lee’s strong demand for investigative authority has actually undermined the FSS’s external negotiating power. The FSS’s external cooperation team has been making behind-the-scenes efforts to persuade the Ministry of Economy and Finance, but has failed to gain much traction. Instead, the FSS has pushed forward with issues that the Financial Services Commission is particularly sensitive about, thereby deepening the conflict rather than securing external allies, including the Commission itself.

In the past, the Financial Services Commission played a decisive role in blocking the FSS’s re-designation as a public institution. For example, in January 2018, following the hiring scandal at the FSS in 2017, the then Deputy Prime Minister and Minister of Strategy and Finance (now the Ministry of Economy and Finance) and the Public Institution Management Committee (PIMC) attempted to push through the re-designation, but it was ultimately thwarted by opposition from the Financial Services Commission and the National Assembly’s Political Affairs Committee. However, the prevailing view within the FSS today is that the situation has worsened compared to that time. Both the Financial Services Commission and the Ministry of Economy and Finance are showing a cold response, and the FSS itself has not been able to create any variables to overturn the situation. The FSS labor union has also stated that it will refrain from public activities such as last year’s protests against organizational restructuring.

Nevertheless, some expect that Governor Lee, conscious of pressure from the Financial Services Commission, will not hesitate to speak his mind. There is speculation that, before the PIMC announcement, he could directly or indirectly convey to President Lee Jaemyung the message that re-designating the FSS as a public institution would create a “supervisory-over-supervisory” structure that is inconsistent with global standards. The FSS is currently trying to persuade the government by arguing that if the “supervisory-over-supervisory” structure becomes entrenched after re-designation, its ability to respond to increasingly sophisticated electronic financial crimes and voice phishing will be weakened, making it difficult to fulfill national policy tasks. Some believe that if Governor Lee delivers this message directly to President Lee, there may be hope for a turnaround.

An FSS official commented, “The key issue is whether Governor Lee’s negotiating skills can break through the re-designation problem,” adding, “Even if the Financial Services Commission does not offer support, I do not think Governor Lee will hesitate to convey his opposition to re-designation to President Lee because of that.”

Amid these circumstances, the FSS has become even more unsettled by news that Financial Services Commission Chairman Lee Eogwon will hold a press conference on January 28, just two days before the PIMC decision. This is because, in addition to the controversy over the SJP’s investigative authority, conflicts between the two agencies are intensifying over issues such as the operation of the “Financial Holding Company Governance Reform Task Force” established in response to President Lee Jaemyung’s call to eradicate the “inner circle of corruption,” and the implementation of productive financial policies.

An FSS official remarked, “It feels like d?j? vu from 2019, when there was significant conflict between the Chairman of the Financial Services Commission and the Governor of the FSS over recommending FSS staff seconded to the Capital Markets Investigation Unit (CMIU) under the Financial Services Commission as special judicial police officers,” and expressed concern that, “The public institution re-designation issue is only the beginning, and the Financial Services Commission may once again strongly regulate the FSS across a wide range of key policy and supervisory areas, such as governance reform and oversight of crimes affecting people’s livelihoods.”

The Ministry of Economy and Finance is scheduled to decide whether to include the FSS as a public institution at the PIMC around January 30. If the FSS is designated as a public institution, it will be subject to annual management evaluations by the PIMC. The FSS will be required to regularly submit related management performance reports and supporting documents, and the evaluation grade announced every June will have a decisive impact not only on employee bonuses but also on the tenure of the agency’s head. Typically, if the FSS receives a grade of “insufficient” or lower (D or E), the agency head and executives face a serious situation in which their terms cannot be guaranteed.