|Financial Services Commission Chairman Choi Jong-ku|
A feud between the Financial Services Commission (FSC) and Financial Supervisory Service (FSS) has come to the surface, after union members of the latter issued a statement Dec. 3 requesting President Moon Jae-in to dismantle the FSC.
FSC Chairman Choi Jong-ku and FSS Governor Yoon Suk-heun have continuously said the two agencies are in a "cooperative relationship" whenever signs of discord surfaced, but the recent development clearly demonstrates there is an ongoing feud between the regulatory agencies for hegemony.
This is creating a stir because the FSC is responsible for establishing the government's financial policies, and the FSS is technically under its control as the agency that implements them.
The tension between the two agencies has continued since the FSC-FSS governance system was introduced in 2008, but the recent development will likely intensify the bad blood between them.
|Financial Supervisory Service Governor Yoon Suk-heun|
In its statement, the FSS union also complained about the FSC's move to downsize the former's budget and workforce, calling it irrational.
"The FSC is utilizing its budget appropriation right to tame the FSS," said Lee In-gyu, the head of the union. "Such reckless action should be immediately dealt with."
The commission has allegedly demanded the FSS reduce its budget for 2019 by a huge amount and cut the number of high-ranking officials there by more than 10 percent. The latter's budget for this year was 362.5 billion won ($323.8 million).
The FSC immediately denied the allegation.
"Budget management by the FSS was called into question by the Board of Audit and Inspection," an FSC official said. "We are just trying to make it right."
Bad feelings between the two agencies have escalated since FSS Governor Yoon Suk-heun was appointed in May. Yoon has long claimed his agency should execute its role as a financial overseer independently.
Since Yoon's appointment, the two agencies have clashed on various financial issues, including Samsung Securities' "fat finger" scandal and Samsung BioLogics' alleged accounting fraud.
Opinions are divided about the two agencies' roles in policymaking and investigations.
"Under the current regulatory system, inspections are subordinate to policymaking," Gyeongsang National University professor Kim Hong-beom told the JoongAng Ilbo, a local daily. "The financial overseer's role should be independent from a policymaking body."
"Policymaking and inspections are inseparable," a government insider said on the condition of anonymity. "Government agencies should hold each other in check to maintain the balance. I believe the union crossed the line."