FSC won’t punish financial workers

The Financial Services Commission (FSC) said it will no longer get involved in mistakes made by individual employees at financial companies as part of its support of the creative economy initiative.

The FSC yesterday in announcing its “creative finance” policy said it will significantly reduce its direct punishment of companies and employees and would instead leave the reprimanding to the companies unless the offense is considered serious.

Each year, about 87 percent of penalties handed down to financial company employees are from the FSC. Between 2011 and last year, the FSC investigated 3,400 financial misdeeds.

The FSC added that employees who have issued bad loans or other mistakes without bad intentions will be excused from regulatory actions such as a demotion or paycheck cut.

However, penalties on executives or the financial company as a whole will be decided by the FSC.

The laissez-faire approach by the FSC is part of a plan the authority is calling “creative finance.”

The strategy includes offering more loans to small and midsize companies including start-ups, fostering the investment capital market to help financing tech-based companies and encouraging innovation in the conservative financial market.

The FSC believes that by eliminating regulations on financial employees, they will become more confident and aggressive in lending to small and midsize companies who will use their technology as collateral.

“We believe more than 90 percent of the penalties will be reduced when we tell the financial companies to make their own decisions about their employees,” said Kim Yong-beom, director general on financial policy at the FSC.

“However, we plan on strengthening our actions such as … business suspensions and fining the financial company itself [if it violates any laws].”

The FSC is planning to vitalize the investment market for small and midsize companies with promising technology by creating an investment fund worth 300 billion won ($295 million).

The authority said it will also offer incentives to encourage financial companies to give loans to small and midsize companies with their technology as the only collateral.

Additionally, funds given to banks to use to buy intellectual property and shares in start-ups will be expanded to 470 billion won.

“In the past 18 months, although we have created a regulatory framework and focused our efforts on realizing creative finance, there has been a huge difference in the role of [financial institutions] expected by the economy and the actual reality of the industry,” said Kim.

“So we decided to accept the various opinions of experts in related fields and the actual voices from in the field, including tech companies and the financial industry.”

BY lee ho-jeong [ojlee82@joongang.co.kr]