Under Moon, a regulatory overhaul is likely

On the campaign trail, Moon Jae-in of the liberal Democratic Party vowed to clean up the country’s financial regulatory system, remove conflicts of interest and eliminate redundancies.

Now, as president, he will likely lead an overhaul of the sprawling bureaucracy that regulates Korea’s markets and industries.

Although Moon has yet to announce his nascent administration’s economic team or propose any specific structural changes, there are signs that a shake-up might be imminent.

Yim Jong-yong, chairman of the Financial Services Commission, the country’s top regulatory agency, offered to resign on Monday, a day before the presidential election. The commission was established by the conservative Lee Myung-bak administration and could be eliminated under Moon’s presidency.

The Korea Institute for the Future, a Democratic Party think tank, proposed in March that the policy-making functions of the Financial Services Commission be merged into the Ministry of Strategy and Finance and the regulatory role be taken on by the Financial Supervisory Service.

Rep. Choi Woon-yeol, an economic adviser for the Moon campaign, suggested abolishing the Financial Services Commission, arguing that the agency often has conflicts of interest, lacks expertise and operates inefficiently because it oversees too broad a range of financial issues.

“The problems with Daewoo Shipbuilding and Marine Engineering and skyrocketing household debt all stem from ineffective financial oversight,” Choi told reporters last year, referring to the commission’s orchestration of a government bailout for the shipbuilder and Korea’s rising consumer debt.

Choi also raised the need to strengthen financial consumer protection. Currently, that role falls to the Financial Supervisory Service, but the lawmaker believes a separate agency should manage the task.

The Financial Services Commission declined to comment on speculation about its demise.

Some believe Moon might refrain from radical structural changes since they would require legislative approval and could spark controversy at a time when the administration is still filling cabinet positions.

Whatever the case, Moon’s financial policy direction will likely be a departure from his two predecessors, Park Geun-hye and Lee, who both advocated deregulation.

Moon, on the other hand, has continually called for stricter rules to rein in the country’s powerful family-run conglomerates.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]