The Financial Supervisory Service on Wednesday decided to ban its staffers from taking senior posts at financial companies right after their retirement as a way to prevent corruption.
The decision came as part of its sweeping reform measures following several incumbent FSS staffers’ wrongdoings.
In its statement, the regulatory body said it would ban the habitual practice under which incumbent and former staffers were recommended as auditors for banks or brokerage firms.
“We will completely eliminate the practice. In addition to stopping our recommendation practice, we plan to reject the sort of calls from financial companies,” the FSS said in a statement.
Retirees of the FSS have often taken top posts at commercial banks, which often gives the lenders networks to lobby the watchdog.
It is also planning to hand down tougher disciplinary sanctions against staffers implicated in actions that go against their code of conduct as regulatory officials.
“Staffers engaged in serious improprieties including taking kickbacks will be subject to dismissal,” it said.
In addition, the FSS said it will assess the ethics of all staff to prevent those with lower scores from working at certain departments.
A system of whistle-blowing will also be set up by enhancing the manpower in charge of internal audits.
The FSS stressed that the reform scheme is based upon the idea that the regulator has decided to “give up the privileged status and be faithful to laws and principles.”
Recent woes in the distressed secondary banking sector brought about the urgent measures in the FSS.
Public criticism against the regulator intensified after the FSS failed to block internal information on savings banks from being leaked.
Among the incidents were several customers of Busan Savings Bank withdrawing large deposits a day before regulators suspended operations of the distressed bank in February.
It has been alleged that key staffers of Busan Savings Bank had been informed of the rumor that the FSS would soon halt the operations.
Despite the spreading rumor ahead of the business suspension, it has been found that regulatory officials in the FSS’ Busan office failed to take necessary measures to block the massive withdrawal by several customers.
An FSS staffer allegedly engaged in irregularities concerning the case committed suicide while several incumbent and former FSS officials have been under investigation by the prosecution.
Several economists criticized the FSS’s exclusive power, claiming the Bank of Korea or the Korea Deposit Insurance Corp. should also be given the authority to probe financial companies independently.
By Kim Yon-se (email@example.com