Jo Hong-min, a former director of the Financial Services Commission, transitioned last month to become an executive at Next Trade (NTX), an alternative trading platform. A graduate of the 43rd National Civil Service Examination, he has held key positions including director of electronic finance, head of the governance team at the Financial Group Supervision Innovation Division, and member of the Financial Crime Response Team. In the same month, Ma Soon, a former secretary at the Financial Services Commission, moved to the law firm Hwawoo after working with the joint task force on stock price manipulation. Kwak Sang-hyun, a former director of the Treasury Department, also joined Meritz Financial Group as an executive last month.
Key personnel from the policy agency responsible for overseeing financial institutions are increasingly leaving for the private sector. While the trend of bureaucrats moving to private companies is not new, the recent wave of departures is unprecedented in both scale and quality. Factors contributing to this exodus include high work intensity, low salaries, and housing instability due to relocation issues. There are significant concerns about the consequences of this trend.
The departure of experienced personnel who have developed policies and supervised capital markets could weaken the oversight functions of financial institutions and degrade the quality of management and supervision that protects the public's financial assets.
High-Level and Mid-Level Departures
On October 7, an analysis of 51 cases of private sector job changes by former officials from the Ministry of Economy and Finance, the Financial Services Commission, and the Financial Supervisory Service, registered with the Ministry of Personnel Management from January to September, revealed a growing trend of mid-level personnel leaving. The majority of departures were from the Financial Supervisory Service, but there were also significant numbers from the Ministry of Economy and Finance and the Financial Services Commission.
Among those who left, 20 were at the second level, 10 at the third level, 4 at the fourth level, and 2 at the first level from the Financial Supervisory Service. The Ministry of Economy and Finance recorded 9 senior officials and 2 at the third and fourth levels. In the Financial Services Commission, 75% of the departures were mid-level officials at the fourth level. The fact that 78.4% of the departures were from the second and third to fourth levels, who are expected to take on key responsibilities, raises concerns about the deterioration of financial oversight.
These individuals are moving to well-regarded positions in financial firms, large corporations, and major law firms. The most common destinations include Samsung Securities, KB Asset Management, Toss Securities, and Kakao Bank, all of which are private financial institutions that previously operated under regulatory authority.
A Financial Supervisory Service official stated, "If personnel trained with taxpayer money are poached by private financial firms, the quality of policy will deteriorate in the long run, and the oversight functions of financial institutions will weaken, leading to increased complaints and various side effects. This is a significant loss for the country." Another official added, "The departure of experienced personnel requires substantial time and resources for new hiring and retraining, and many are expressing fatigue due to personnel shortages. There is also a sense of self-deprecation that national agencies are becoming training grounds for financial firms."
Low Compensation and Staffing Bottlenecks as Causes
Reasons for the exodus of personnel from financial authorities include lower salaries and benefits compared to financial firms, as well as internal staffing bottlenecks. As public expectations rise, the excessive job burdens related to policy quality and the pressure of repeated relocations with each change of administration have become pressing concerns. Over 40% of the staff at the Financial Supervisory Service are composed of accountants and lawyers, making it relatively easy for them to leave.
In fact, the average salary for Financial Supervisory Service employees is 111.6 million won, a 9.5% increase from 2021 (101.7 million won). In contrast, during the same period, the average salary for employees at Samsung Securities rose from 132 million won to 170 million won, an increase of 28.8%. The salary for the highest-ranking official at the Financial Supervisory Service is around 250 million won, which is significantly lower than the salaries of presidents at the top five securities firms (1.8 billion to 3 billion won) and even below the average salary for executives (500 million won).
A Financial Services Commission official noted, "As salaries in financial firms rise sharply and housing instability in places like Sejong increases, the opportunity costs grow, making it difficult to retain young officials solely on the basis of honor and patriotism. Additionally, the employment screening process for public officials is becoming increasingly stringent, leading some to feel the need to leave before it becomes too late."
The impact of the increasing exodus of talent from financial oversight agencies will ultimately fall on the public. A Financial Supervisory Service official remarked, "With the complexity of policy issues related to private equity fund incidents, various financial accidents, and global economic interconnections, the importance of personnel with practical experience is greater than ever. A compensation system that can structurally prevent this exodus is urgently needed."
* This article has been translated by AI.
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