New FSS head vows more autonomyThe Financial Supervisory Service will alter its supervision of financial institutions in a way that lets them take more risks and strengthen their self-monitoring in order to restore dynamism and creativity in the industry.
FSS Gov. Zhin Woong-seob, who took office in November, outlined his plan for next year at a press conference held at the FSS headquarters in Yeouido on Monday.
“We acknowledge that our financial market disappointed people due to frequent mishaps this year and the FSS has been under fire,” Zhin said. “At a crucial economic crossroads, I feel grave responsibility as the FSS governor.”
Zhin has been avoiding the press since taking the position. Reports say he wants to be a silent regulator.
His predecessor, Choi Soo-hyun, came under criticism for intervening in institutions and punishing employees and companies in the industry. The ousting of KB Financial Group’s chairman and Kookmin Bank’s CEO in September was the result of FSS intervention in the group’s internal affairs of changing the bank’s main computer system.
Zhin described his own ideas about supervising the financial industry.
“First of all, both the financial authority and institutions should do their best to restore trust from consumers,” he said. “The authority will do its best in monitoring the fiscal soundness of institutions, while institutions must try their best to protect consumers.”
FSS officials will hold regular meetings with managements of financial institutions, establishing practices of “mutual trust,” the governor said.
Zhin underscored that creativity is crucial in the financial sector. He said institutions should be willing to take an adequate amount of risks.
“Within a tolerance level, institutions should take risks,” Zhin said. “When the real economy is in trouble, the role of financial institutions is supporting the economy by taking risks.”
For the past two years under former Governor Choi, complaints were frequent across the financial industry for excessive intervention in management and operations of institutions.
A critical moment was the massive data leaks early this year, said an executive at an insurance company who declined to be named. It was understandable that the FSS should show the public it was doing something to enhance consumer protection, but for institutions, a lot of inefficiency was incurred.
The FSS started taking complaints from consumers directly. Consumers could file complaints to both the FSS and their financial institution.
The authority shouldn’t get involved in every single complaint by consumers, the executive said. The FSS was less interested in monitoring the fiscal soundness of institutions and more interested in showing that it was punishing institutions.
Following large-scale layoffs in the securities sector, the insurance market is also undergoing restructuring by trimming work forces as profits keep falling with low interest rates and in a low-growth environment.
Meritz Fire and Marine Insurance dismissed 16 out of 34 executives, including the president, a day before Christmas Eve. The officials were blamed for a 20 percent plunge in net profit in the third quarter compared to the same period last year.
As the loss ratio of property insurance companies, especially automobile insurers, has reached its peak of nearly 90 percent, exceeding 1 trillion won ($912 million) in total expenditures, such radical work force restructuring is expected to take place at money-losing insurers in the near term.
“For development of the financial market, the financial authority’s intervention should be made at an appropriate level from a long-term prospective,” Zhin said. “Letting institutions enhance their self-monitoring function will enable them to correct frequent wrongdoings themselves.”
BY SONG SU-HYUN [firstname.lastname@example.org]