April 19, 2024
Finance
[COLUMN] Duties the people of Korea assign to FSS
[THE INVESTOR] The Korean people have assigned the Financial Supervisory Service duties of securing financial stability and protecting financial consumers. Therefore, the FSS has to devote itself to fulfilling such duties that are also the reason why the organization exists.
Both duties are so crucial to protecting people’s invaluable assets and developing financial industry that neither of them can be neglected. Therefore, it is not an exaggeration to say that employees of the FSS should do their utmost to carry out the duties.
However, it is difficult for the FSS to keep a balance when it performs its supervisory task, and the FSS sometimes ends up focusing on one duty more than the other or even giving up one of them.
For example, when financial companies decide to charge new fees or raise their fees to improve profitability, the FSS duties can collide with each other. In case the FSS sets sights on securing financial stability, the FSS needs to stay away from getting involved in the fee-related issues of financial companies. On the other hand, if the FSS focuses on consumer protection, it should actively review whether the fee imposition is reasonable or not.
Some financial experts think that securing financial stability should come first because the aim of consumer protection cannot be achieved without fully secured financial stability.
Others argue that enhancing financial stability is meaningless if financial consumers’ interests and rights are not protected. Indeed, in many cases the duties collide with each other, and the FSS has been led to pay attention to consumer protection. This is because infringed interests and rights of consumers have an immediate effect more than undermined financial stability does.
For the balancing between the two duties to work, the FSS chooses different ways to perform them. When it comes to financial stability, it needs to adopt a quiet, prudent approach. By contrast, financial consumer protection should be strengthened and promoted in an active manner, but only at an acceptable level.
For example, in order to keep financial companies from going insolvent and prevent accidents, the FSS should identify what needs to be improved in an early stage through offsite surveillance system, securing financial stability based on preemptive guidance and prior warning. And relevant procedures should be followed in a careful and serious way. This is because excessive supervision would adversely affect financial companies’ management and arouse anxiety in financial markets. Therefore, the FSS should work like a swan, which seems to oar its way gracefully, but actually keeps moving rapidly beneath the water’s surface.
On the other hand, in order to prevent voice phishing, improve unreasonable financial practices and provide consumers with a wider range of information, the FSS should actively collect opinions and promote relevant methods for improvement. This is to raise awareness about efforts the FSS has made among consumers, helping them prevent damage and protect their own interests and rights. For this, the FSS has to take the lead in paving the way and guiding consumers into the right direction.
As stated above, the two duties the Korean people assigned to the FSS could collide with each other, and this is likely to cause conflicts. Therefore, the FSS should take a reasonable and sensible approach toward the duties based on a balanced perspective. This is what the Korean people want from the FSS.
By Seo Tae-jong
Seo Tae-jong is the First senior deputy governor of Financial Supervisory Service. He can be reached at tjseo386@fss.or.kr – Ed.
Both duties are so crucial to protecting people’s invaluable assets and developing financial industry that neither of them can be neglected. Therefore, it is not an exaggeration to say that employees of the FSS should do their utmost to carry out the duties.
However, it is difficult for the FSS to keep a balance when it performs its supervisory task, and the FSS sometimes ends up focusing on one duty more than the other or even giving up one of them.
For example, when financial companies decide to charge new fees or raise their fees to improve profitability, the FSS duties can collide with each other. In case the FSS sets sights on securing financial stability, the FSS needs to stay away from getting involved in the fee-related issues of financial companies. On the other hand, if the FSS focuses on consumer protection, it should actively review whether the fee imposition is reasonable or not.
Some financial experts think that securing financial stability should come first because the aim of consumer protection cannot be achieved without fully secured financial stability.
Others argue that enhancing financial stability is meaningless if financial consumers’ interests and rights are not protected. Indeed, in many cases the duties collide with each other, and the FSS has been led to pay attention to consumer protection. This is because infringed interests and rights of consumers have an immediate effect more than undermined financial stability does.
For the balancing between the two duties to work, the FSS chooses different ways to perform them. When it comes to financial stability, it needs to adopt a quiet, prudent approach. By contrast, financial consumer protection should be strengthened and promoted in an active manner, but only at an acceptable level.
For example, in order to keep financial companies from going insolvent and prevent accidents, the FSS should identify what needs to be improved in an early stage through offsite surveillance system, securing financial stability based on preemptive guidance and prior warning. And relevant procedures should be followed in a careful and serious way. This is because excessive supervision would adversely affect financial companies’ management and arouse anxiety in financial markets. Therefore, the FSS should work like a swan, which seems to oar its way gracefully, but actually keeps moving rapidly beneath the water’s surface.
On the other hand, in order to prevent voice phishing, improve unreasonable financial practices and provide consumers with a wider range of information, the FSS should actively collect opinions and promote relevant methods for improvement. This is to raise awareness about efforts the FSS has made among consumers, helping them prevent damage and protect their own interests and rights. For this, the FSS has to take the lead in paving the way and guiding consumers into the right direction.
As stated above, the two duties the Korean people assigned to the FSS could collide with each other, and this is likely to cause conflicts. Therefore, the FSS should take a reasonable and sensible approach toward the duties based on a balanced perspective. This is what the Korean people want from the FSS.
By Seo Tae-jong
Seo Tae-jong is the First senior deputy governor of Financial Supervisory Service. He can be reached at tjseo386@fss.or.kr – Ed.
