Innovative ways to improve the financial supervisory system.
On August 2nd, the government published plans to regain reputation from people. Due to series of incidents involved in not such transparent transactions, the financial authority’s reputation has plunged.
For this reason, under the President’s directions, a task force team formed to find ways to improve the transparency of financial supervision systems.
Main measures to innovate financial supervision systems
Improving the prudent, transparency and responsibility of financial supervision and investigation
First, there was a plan to reorganize departments according to their functions. Prior to this plan, they were divided into types of financial businesses. Also, government would give big responsibility to each department and increase the number of inspectors because they were criticized for its shortage of skilled people.
Broaden the inspection range of Korea Deposit Insurance Corporation (KDIC)
KDIC is expected to be able to have inspection ability thoroughly with its increased role by this announcement and it will become mandatory for KDIC and FSS to investigate together,
In addition, KDIC’s inspection range has been broadened. It only investigated investigate saving banks with lower than 5% of BIS ratio before, but it can investigate banks which have lower than 7% of BIS ratio and has deficit for three consecutive years. Besides some mentioned plans above, the government announced other additional ways to improve its independence and transparency of investigation and supervision.
Reform the discipline concerning executives and staff members of FSS.
Treating former FSS member with special respect was also pointed out as a problem. Therefore, some plans to strengthen employment restrictions into financial companies and expand subject to the property registration were added. Moreover, the current target of the property registration is expanded at Level 2 or higher to grade 4 or over.
However, there is a different view that this regulation makes it difficult to employ a superior workforce, so they should prepare supplementary measures to solve the mentioned problem.
Upgrading the quality of inspection and supervision.
The way to upgrade each department’s capabilities categorized by function was also proposed. The concept of this plan was to build a computerized system analyzing the size of the entire loan of saving banks in order to expose the poor banks as soon as possible. Also, through outsourcing and recruitment of professionals, they want to enhance their professionalism.
Furthermore, basic education on inspection would be made mandatory for existing employees to strengthen systematic education. In addition, in order to raise business practices and procedural efficiency, they plan to openly release all data for public viewing.
Despite this measures published in August, there are still many who criticizes that such an improvement has limits to prevent financial corruption. The government agrees that lack of implementation is one of the reasons of repeated corruption, so they try to pay attention to the whole implementation process.
Through this announcement, government exerts all the endeavors to improve overall supervision and inspection and try to regain public and finance companies’ confidence.