Yoon Suk-heun, the new governor of the Financial Supervisory Service (FSS), has defined the essence of financial supervision as risk management, stressing the identity of the regulatory agency and the independence of its policy.
His comments are more than a reference to a basic principle. They are interpreted as reflecting his intention to forge a new relationship with the Financial Services Commission (FSC), which sets policies on financial supervision.
At the inauguration ceremony held at the FSS Center in Yeouido, Seoul on August 8, the new governor said, “The basic principle of financial supervision is to prepare for potential risks before they become visible and resolve the current risks,” adding “The FSS must become the backbone of national risk management.”
“Watertight financial supervision will allow the government to pursue appropriate financial policies and help financial companies focus on developing and innovating financial instruments and services, which will lead to increased benefits for financial consumers,” he explained.
Yoon cited as an example the threat to the national economy posed by household debt. He said, “Having failed to establish a clear identity, the FSS was shaken by diverse demands from different interested parties. This resulted in an imbalance in the distribution of funds and blind spots in financial supervision.”
It seemed that he was referring to the FSS's failure to raise voices against FSC's decision to ease regulations on the loan to value (LTV) ratio and debt to income (DTI) ratio during the Park administration.
"The FSS is literally an organization designed to supervise the financial sector,” Yoon said, stressing, “Its independence is essential to fulfil the task." He added, “It is not acceptable for the FSS to become a tool for completing administrative measures.”
Yoon seems to believe that the FSS, which enforces financial supervisory policies, should not be a subordinate of the FSC, which establishes financial policies.
Yoon also said, "We will fulfill our duty to manage national risks in the financial market and industry through checks and balances,” adding, “At the same time, we have to work in accordance with laws and principles in a timely manner."
In the meantime, Yoon showed an air of prudence by refraining from commenting on pending issues such as the accounting fraud allegations against Samsung BioLogics, the fat finger incident of Samsung Securities, and cryptocurrency.