A conflict between the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) is developing into an emotional fight.
The labor union of the FSS issued a statement on Dec. 3 to request President Moon Jae-in to dismantle the FSC which, in its view, “unfairly helps Korean chaebol.” The union also argued that the FSC used its right to review FSS budge to tame it.
The FSC is responsible for establishing the government’s financial policy, while the FSS is an organization that implements the FSC’s policy.
The friction between the FSC and the FSS over policy-making processes and inspection results has been nothing new. But it is unprecedented that the bad blood between the two reached such an extreme level of the FSS asking the president to break up the FSC.
What promoted the FSS labor union to openly demand the dismantlement of the FSC was the latter’s move to shrink the FSS budget and organization.
The FSC reportedly ordered the FSS to come up with a plan to slash the FSS’s budget for next year and its high-ranking officials by more than 10 percent. The FSS’s budget for this year is 362.5 billion won. Given that the bulk of the budget is spent to cover labor costs, the FSC sought to keep the FSS staff's salary raises and promotions down to the maximum extent possible. This belt-tightening measure has allegedly compelled the FSS to minimize its officials’ overseas business trips next year.
Prior to this discord, the two organizations clashed over the results of an audit of Samsung BioLogics.
In the financial industry, there is a concern that the two organization’s conflict may push their core tasks such as the protection of financial consumers to the back burner.