Task force fails on reforming FSS

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Task force fails on reforming FSS

The Prime Minister’s Office has created a task force in a desperate attempt to reform the scandal-plagued Financial Supervisory Service, which has recently emerged as a “hotbed of corruption.”

But we wonder if people will see the task force as a success, given that it has only come up with the idea of establishing an agency to protect financial consumers.

Unfortunately, that’s what appears to have happened. The task force reportedly put the finishing touches on the idea last weekend. Under the plan, the FSS consumer protection unit will be spun off and a new body will be established under the Financial Services Commission.

If that’s the case, it’s shocking. Where are all their commitments to find the best possible solution to address the rampant irregularities involving the FSS? Did they ignore President Lee Myung-bak’s resolution to revamp it?

The task force was launched with the aim of rejuvenating the FSS by rooting out corruption and malpractice. The creation of an independent consumer protection agency has nothing to do with its original goal.

As we have stressed repeatedly, the reform drive must be pushed in two directions. First, the FSS must gain independence from the government and politics. Second, its supervisory power must be diffused.

The most important of these is the FSS’ independence. It can hardly expect to be independent in the current environment, in which various forms of pressure and lobbying are employed within its walls.

Moreover, it is impossible for the FSS, which is under the FSC, to conduct strict and neutral surveillance of financial companies because the FSC’s job is deregulation of the financial industry. Only when the FSC’s dominance over the FSS ends can the latter recover its sovereignty.

Also, the FSS’ power to oversee financial institutions should be shared by the Bank of Korea or the Korea Deposit Insurance Corporation. That could, of course, invite criticism. But the latest corruption scandal involving Busan Savings Bank proves that more damage is caused by its monopoly on power than redundancy in supervisory duties.

The FSS also needs to reflect on its actions. If its internal audit had worked, a crisis of this magnitude would not have occurred. Civilians should take responsibility for an internal audit, while increasing the number of auditing staff. The task force must not forget why it was created in the first place.
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