The Park Geun-hye administration’s state agenda for setting up an independent board for financial consumer protection has faced a deadlock as the National Assembly chose not to pass the relevant bill during its plenary session in April, opting for further deliberation with government officials.
The state-led plan, aimed at bolstering consumers’ rights in the financial market, is designed to split the consumer protection department from the Financial Supervisory Service.
Policymakers had expected that under the decision-making Financial Services Commission, the new board would be entitled to share equal status with the FSS, which will prioritize oversight of the soundness of financial firms after handing over the consumer protection function to the board.
The project, however, hit a snag as some lawmakers demanded the establishment of a consumer protection commission, separate from the consumer protection board.
The lawmakers argued that the dual regulatory system of the FSC, composed of civil servants, and the FSS, composed of quasi-government officials, should also be reflected in the consumer protection segment.
Further, some lawmakers also clashed with the government over the budget authorization.
The main opposition New Politics Alliance for Democracy said the budget authorization for the consumer protection board and the consumer protection commission should not be held by the government, but by the National Assembly.
Opposition lawmakers also demand that the staff of the two coming stand-alone entities should consist of financial experts from the private sector, who will be recommend by the Assembly.
The government is opposing the opposition lawmakers’ suggestion, citing the long-standing case of the Bank of Korea’s budget, which is allocated not by the National Assembly, but by the Finance Ministry.
The government also raised the possibility that the two entities could be swayed by political self-interest should their officials be recommended by the Assembly.
While the consumer protection department has operated under the FSS for more than a decade, the Park administration has pushed for a spinoff in a bid to conduct closer surveillance on financial firms’ irregular practices of victimizing retail investors or borrowers.
Meanwhile, the FSC, whose primary role is to set financial policy, and the FSS, an agency authorized to investigate and penalize financial firms that fail to protect consumers, have also locked horns over the new consumer protection entities.
By Kim Yon-se (firstname.lastname@example.org)