# Financial Supervisory Service Canonical: https://web4.xpay.bi/en/wiki/wp-en-19217735/ Language: en Published: 2026-10-25T20:09:51.959Z Updated: 2026-10-25T20:09:51.959Z 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. ## Key facts ## Overview 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. ## Financial Supervisory system in S. Korea prior to FSS 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. ## Establishment of Financial Supervisory Service (FSS) 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: Consolidation of the existing supervisory agencies into one organization to better deal with market liberalization, business expansion into other financial sectors, and the rising uncertainty in the market; Establishment of an autonomous financial supervisory authority independent from macroeconomic, monetary and credit policies; Proper distribution of responsibilities and strengthened cooperation among related agencies 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. ## Major progress The consolidation of the financial supervisory system helped Korea to quickly and efficiently recover from the 1997 Asian financial crisis. The FSS led an intensive restructuring of the financial industry, eliminating insolvent financial companies and putting the financial system back on track. Over a six-year period extending from 1998 to 2003, 840 financial companies – including 14 banks – were removed from the market through M&As, P&As, or liquidation. To combat increased corporate insolvency resulting from the 1997 Asian financial crisis, the FSS successfully headed a corporate restructuring drive that implemented a series of measures like the improvement of conglomerates' financial structure, liquidation of failing companies, and workout program. The FSS also reacted expeditiously to the credit card crunch and market distress of 2003 – caused by excessive credit card business expansion – by strengthening prudent supervision of credit card companies and encouraging the development of M&As in order to prevent uncertainty from spreading throughout the financial market. The integrated supervisory agency also facilitated a systematic application and supervision of programs introduced in the aftermath of the crisis, such as forward-looking criteria (FLC), a system of financial holding companies, and the retirement pension plan. In enforcing prudent regulations such as prompt corrective action, business management evaluation, and capital adequacy ratio, it was also able to coordinate and maintain equity across financial sectors. ## Purpose The purpose of the Financial Supervisory Service is to contribute to the growth of the national economy by 1) promoting the advancement of the financial industry and the stability of financial markets; 2) establishing sound credit order and fair financial transaction practices; and 3) protecting financial consumers, such as depositors. (Article 1, Act on the Establishment, etc. of Financial Services Commission) ## Legal status The FSS was established for a special purpose and is legally based on the Act on the Establishment, etc. of Financial Services Commission. It administers public affairs independent from the central and regional governments of Korea. The intended effect of its legal status as an independent public entity rather than a governmental operation is twofold: 1) to minimize government interference of the FSS's supervision of financial institutions; and 2) to ensure a fair and independent execution of its supervisory services. ## Executives (as of May 14, 2012) Its current governor Kwon Hyouk-Se was named to his position in March 2011 after a career of nearly three decades in finance-related positions in the government, including with the Ministry of Finance and Economy (Mofe), predecessor to the Ministry of Strategy and Finance, and the Financial Services Commission. Kwon Hyouk-Se, Governor Park Soo Won, Chief Executive Auditor Choi Soo Hyun, First Senior Deputy Governor Ho Joong Kim, Chief Accountant ## Organizational structure (as of June 13, 2012) Source: The FSS headquarters in Seoul has 38 departments, and 13 offices. Regional offices are in operation in Busan, Daegu, Gwangju, and Daejeon, and representative offices in Jeonju, Chuncheon, Chungju, and Jeju. The FSS is also present in New York, London, Tokyo, and Beijing, and has residing staff in Washington D.C., Frankfurt and Hong Kong. The FSS established Financial Consumer Protection Agency directly reporting to and under the supervision of the Governor on May 15, 2012, independent of supervision and examination divisions. ## Financial Disputes Settlement Committee Pursuant to Article 51 of the Act on the Establishment, etc. of Financial Services Commission, the Financial Disputes Settlement Committee is a quasi-judicial body established within the FSS to promptly and fairly resolve financial disputes among users of financial institutions. When a user of or a party concerned with a financial institution applies for a settlement of a dispute, the committee will, depending on the nature of dispute, either recommend the parties involved to reach an agreement or deliberate to resolve the dispute upon verification of facts. The committee is composed of up to 30 members, including an FSS deputy governor who serves as the committee chairman. Other members of the committee include assistant deputy governors of the FSS and specialists representing the legal profession, customer groups, financial sectors, academia, and other relevant sectors. As an out-of-court dispute resolution body, the Financial Disputes Settlement Committee assumes a voluntary role in dispute mediation. However, when both parties to a dispute accept a mediator's proposal, the proposal carries the same effect as an in-court settlement. In this sense, the functions performed by the committee can be said to be quasi-judicial. (Section 5 "Mediation of Financial Disputes," Act on the Establishment, etc. Of Financial Services Commission). ## Sanctions Review Committee The Sanctions Review Committee advises the Governor of the FSS regarding deliberation of sanctions pursuant to the Regulations on Examination and Sanctions of Financial Institutions. Charged with deliberating a variety of possible sanctions instituted by the Financial Services Commission and/or the Governor of the Financial Supervisory Service, whether against a business' operations or employees, or financial sanctions, the committee is operated to ensure the fairness and equity of sanction measures. The committee is composed of nine members: head and deputy head of sanctions deliberation, head of case presentation, FSS legal advisor (these four members are internal members), FSC representative in charge of case presentation, and four external members chosen from among lawyers, professors, and/or financial experts with professional knowledge of finance-related statutes or scholarship and experience in finance. The three external members are appointed by the Governor of the FSS. Meetings of the committee shall be convened whenever a majority of its members deems it necessary, and resolutions are passed by majority consent of all attending members. ## Major functions FSS acts as the executive supervisor for the FSC and principally carries out examination of financial institutions along with enforcement and other oversight activities as directed or charged by the FSC. Supervision of financial institutions: (Preliminary) review of license applications (for bank, non-bank, financial investment company, insurance company, credit card company, financial holding company, or any other kind of financial institution), review of the terms and conditions of financial institutions; supervision of the soundness of business management and business activities Examination of financial institutions: Analysis and evaluation of financial companies' business activities, financial position, and risk management capacity; verification of companies' compliance with relevant statutes Supervision of the capital market: Operation of disclosure system to maintain the sound operation of primary and secondary markets for marketable securities; capital market investigation to prevent unfair trade practices Supervision of accounting: Alignment of accounting standards to international accounting standards to achieve enhanced transparency; supervision of accounting to ensure a fair operation of the external audit system Protection of customers of financial services: Consultation and handling of customer complaints regarding financial services; protection of customer rights through dispute mediation; financial education of consumers ## Financial Services Commission The Financial Services Commission (FSC) is a central public administration agency falling under the jurisdiction of the Office of the Prime Minister, and is charged with the deliberation and determination of financial policies and other important matters of financial supervision – such as the supervision, examination, and sanctioning of financial institutions, and authorization and licensing of financial institutions. Pursuant to the relevant legal provisions, the FSC may direct and supervise the operations of the FSS. In addition to its inherent responsibilities of supervising and sanctioning financial institutions, the FSS supports the operations of the FSC and its adjoined Securities & Futures Commission, and executes those FSC duties which are entrusted by the FSC to the FSS. (Article 37, Act on the Establishment, etc. of Financial Services Commission) Prior to February 2008, the law provided that the Chairman of the Financial Supervisory Commission (the predecessor to the Financial Services Commission) be concurrently appointed as the Governor of the FSS, with the FSS directly assisting the operations of the commission. The revision of the Act in February 2008 clearly distinguishes the policy-making function of the FSC and the supervisory enforcement function of FSS, and provides that different persons be assigned to head each organization to ensure more effective checks and balances (Article 29 (2) of the Act). The revision also provides that the Governor of FSS may, as an ex-officio member of the FSC, request to the FSC chairman that matters necessary within the scope of FSS operation be included in the commission's agenda. ## Sources - Financial Supervisory Service · Wikipedia: https://en.wikipedia.org/?curid=19217735 Source: Wikipedia contributors — https://en.wikipedia.org/?curid=19217735&oldid=1373491094 Licence: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation notice: Reformatted for XPay; the source may be abridged, restructured or translated. Consult the cited revision for the original.