Financial Supervisory Service (South Korea)
| 금융감독원 Geumnyung Gamdogwon |
|
| Agency overview | |
|---|---|
| Formed | January 2, 1999 |
| Headquarters | Seoul, South Korea |
| Agency executive |
|
| Parent agency | Financial Services Commission |
| Website | english |
| Financial Supervisory Service | |
| Hangul | 금융감독원 |
|---|---|
| Hanja | |
| Revised Romanization | Geumnyung Gamdogwon |
| McCune–Reischauer | Kŭmnyung Kamdogwŏn |
The Financial Supervisory Service (FSS) is South Korea's integrated financial regulator that examines and supervises financial institutions under the broad oversight of the Financial Services Commission (FSC), the government regulatory authority staffed by civil servants.
Before the Financial Supervisory Service (FSS) was established, Korea’s financial supervisory system was largely fragmented, with the banking, securities, insurance, and non-bank sectors individually managed and regulated by a separate agency. Furthermore, the authority of supervision was split between two governing entities, i.e. the supervisory agencies and the Ministry of Finance and Economy (formerly known as the Ministry of Finance; currently the Ministry of Strategy and Finance). Under this segregated supervisory system, the banking sector was overseen by the Bank of Korea and the ministry, the securities sector by the Securities Supervisory Board and the ministry, and the insurance sector by the Insurance Supervisory Board and the ministry. As to non-bank financial institutions established after the 1970s, the overall authority lay with the ministry while functions of examination were delegated to the Banking Supervisory Authority within the Bank of Korea and the Korea Non-Bank Deposit Insurance Corporation.
The end of the 1980s marked a time of diversification in the financial industry and businesses’ crossover into other financial sectors. Meanwhile, the financial environment changed considerably with the opening of markets to foreign investments and the ongoing march of globalization. This led to an increasing number of complex financial transactions – such as derivatives – that blurred the boundaries of banking, securities, and insurance. The multifarious financial supervisory system of the past, in which the banking, securities, and insurance sectors were each regulated by their respective supervisory agencies, was no longer fit to address the innovations in the financial environment. As a result, the government established the Presidential Committee on Financial Reform in 1997, which announced a final report detailing the following recommendations for reform of the financial supervisory system:
Following the guidelines set forth by the committee’s report, the government drafted financial reform bills in August 1997. Based on a recommendation by the International Monetary Fund to establish an integrated financial supervisory body, the National Assembly passed the bill on December 29, 1997. On April 1, 1998, the Financial Supervisory Commission (the predecessor to the Financial Services Commission) was launched as the FSS’s supreme decision-making body, laying the groundwork for the consolidation of the four supervisory bodies (the Banking Supervisory Authority, Securities Supervisory Board, Insurance Supervisory Board, and the Non-bank Deposit Insurance Corporation. To preserve sectoral characteristics while flexibly addressing businesses’ branching into other sectors, a committee of executives and staff from the four supervisory bodies was put together to work out a plan for the consolidated agency. On January 2, 1999, the Financial Supervisory Service (FSS) was finally established.
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