Financial firms urge South Korean regulators to back off internal affairs

The firms represent the insurance, commercial banking, and brokerage sectors.

Several financial institutions from South Korea have urged the government to back off from involvement in corporate internal affairs, according to a report by The Korea Herald.

The Korea Federation of Banks, Korea Financial Investment Association, Korea Life Insurance Association, General Insurance Association of Korea, the Credit Finance Association and Korea Federation of Savings Banks representing the commercial banking, brokerage, and insurance sectors have filed a joint request asking regulators to hand the boards of the companies more autonomy over internal affairs.

The report said that in the request, the representative bodies hinted at their objection against the policymaking Financial Services Commission and the watchdog Financial Supervisory Services’ (FSS) slew of “harsh” penalties slapped on company chiefs.

“We request the financial authorities to monitor and make suggestions rather than the current way of imposing sanctions, considering that internal control is a matter of self-regulation for businesses. We also ask regulators to provide detailed legal clauses for cases that require mandatory involvement by the authorities concerning customer protection and sound management to prevent arbitrary rulings and bolster foreseeability for businesses,” the document read.

The request follows the Seoul Administrative Court’s decision last month that nullified the FSS’ “reprimand” warning on Woori Financial Group Chairman and CEO Sohn Tae-seung. Sohn was imposed with the third-highest level out of the FSS’ five-tier punishment system, which intended to bar Sohn—who started his second term as the banking giant’s chairman in March last year—from holding positions at financial institutions for three years.