[기고]Financial Group Supervision, It’s a Start Again

Seongbok Lee Research Fellow, Capital Market Research Institute

[자본시장연구원 이성복 연구위원] On the 9th, the Act on the Supervision of Financial Complex Enterprises passed the 21st National Assembly. It is expected to be implemented from next July. Of course, since July 2018, the financial group supervisory system has been piloted in the form of a model standard, so there is nothing new.

Nevertheless, it is a meaningful news in that the discussions and efforts so far have been enacted by law. Moreover, the legalization of the financial group supervisory system is very significant in that it was introduced later than overseas and has been continuously recommended by international organizations such as the IMF.

Until the financial group supervisory system was legislated, it was not without pain. In the first half of 2016, while trying to enact a model standard, it was canceled, and in 2018, two bills proposed in the 20th National Assembly were automatically abolished. Considering that the financial group supervisory system was discussed in earnest in Korea in May 2015, it can be said that it has suffered for over five years. However, the pain was not meaningless. This is because model standards were enacted with the consent of seven financial groups in July 2018, and over the next two years, financial authorities and financial groups had time for careful discussion and rational adjustment, laying the foundation for legalization.

Of course, it is true that the afterglow of pain remains. The legalization of the financial group supervisory system does not mean that the criticism of double regulation, overregulation, and beating large companies has disappeared. No matter what words explain the justification and necessity of the financial group supervisor, there is room for such criticism to continue to be raised. However, it should not be overlooked that the Financial Group has sincerely complied with the best standards and prepared faithfully for legislation. Therefore, now is the time to avoid exhausting criticism and debate and to stick to the roles stipulated by law to increase the effectiveness of the financial group supervisory system.

First of all, each person must reinforce their capabilities based on the experience of piloting best practices over the past two years. Financial groups should develop their own risk management and internal control capabilities to recognize and manage group-level risks. In particular, the financial group should establish a seamless information sharing and communication system between the representative company and affiliated financial companies. The same is true of financial authorities. It is necessary to expand the supervisory capacity to effectively and efficiently monitor and direct the financial group’s risk management and internal control activities.

Financial authorities must thoroughly enact enforcement ordinances and supervisory regulations before the law enters into force. As has been the case, the opinions of financial group practitioners and experts must be actively collected. It must also be able to balance ideal goals and realistic limitations. Particular attention should be paid to the financial group not to incur unnecessary regulatory costs. For example, when the scope of affiliated financial companies is specifically stipulated in the enforcement ordinance and supervisory regulations, the financial group supervisor needs to reconsider whether the financial group’s representative company includes foreign affiliated financial companies that are difficult to control directly. have.

It is no exaggeration to say that the financial group supervisor is starting from now. Just because the law was enacted doesn’t mean it’s all done. As the financial group supervisory system is legally binding, there should be no large-scale financial consumer damage or threats to the stability of the financial system as a whole. Financial authorities and financial groups must be faithful to their respective roles so that the financial group supervisory system can function in practice. Any deficiencies found in the process of implementing the financial group supervisory system should be corrected in a timely manner. In that case, you can get the effect of the financial group supervision system that everyone wants.