Lee Chanjin Says "FSS Should Be Designated as a National Institution... U.S. SEC and Japan FSA Are Desirable Models"

Work Report to the Political Affairs Committee

Lee Chanjin, Governor of the Financial Supervisory Service, said on the 5th that it would be desirable for the Financial Supervisory Service, which recently avoided being designated as a public institution, to be designated as a "national institution."

Yonhap News Agency

At a work report session of the National Assembly’s Political Affairs Committee on this day, Governor Lee mentioned the controversy over granting special judicial police powers and gave this answer to a question from Lee Inyoung, a lawmaker of the Democratic Party of Korea, about what nature the Financial Supervisory Service should have among a government ministry, a public institution, or a private organization.

He said, "Personally, the most desirable option would be to make it a national institution like the U.S. Securities and Exchange Commission (SEC) or Japan’s Financial Services Agency, as that would leave the least room for problems and controversy."

The Financial Supervisory Service was recently mentioned as a possible candidate to be designated as a public institution by the Public Institutions Operation Committee, but ultimately avoided such designation. However, as a plan is being pursued to grant the right to initiate investigations to the special judicial police of the Financial Supervisory Service, which is currently a private organization, the controversy continues over the nature of the institution and the scope of its authority.

Governor Lee explained, "If you look at the fundamental background of the establishment of the Financial Supervisory Service, it was born in the context of the International Monetary Fund (IMF) foreign exchange crisis," adding, "Given that it was launched with an emphasis on independence from the government, autonomy, and expertise, it is difficult to describe it as a private institution, and it was established as a special corporation without capital." He went on to say, "Although it is not on the same level as the Bank of Korea, it does have independence, expertise, and a special status, and an approach that takes those aspects into account is necessary."

In response, Assemblyman Lee said, "The Financial Supervisory Service needs to set and pursue its long-term and strategic position with a clear direction on whether it will become, in relation to finance, something like the Board of Audit and Inspection, or like the prosecution or the police, or like the Bank of Korea," adding, "Even if, for the time being, the special judicial police are granted the right to initiate investigations in order to respond swiftly to financial crimes and stock price manipulation, that should only be temporary, and it is not appropriate to grant judicial power to a private organization."