FSS to rein in pay for top insurance, securities execs

The nation’s financial regulator plans to widen its investigation into the incomes of bank executives to heads of insurance and securities companies.

The Financial Supervisory Service said Monday that it would launch an investigation into the annual paychecks of every single executive of insurance firm and brokerage. The investigation will take place before the turn of the year, the regulator said.

The move came about two weeks after the FSS officially confirmed its decision to screen the annual salaries of executives of banks and financial groups despite their companies’ falling profits.

The checkup plan is designed to ensure that financial executives earn what they deserve, in due proportion to the companies’ performances, the FSS stated.

With insurers and brokerages added to the mix, the financial watchdog finally has completed its paycheck map of the big-3 financial domains: banks, insurers and brokerages.

“Unlike the banking sector, we do not have much fixed about these two sectors yet. We are still discussing exactly how we will look into securities and insurance,” said an FSS official close to the cause.

“We are discussing whether we should include outside executives in the probe,” the official said, noting that securities firms prefer hired guns to registration executives.

Following the FSS’s unofficial decision, securities firms showed mixed responses.

“Frankly speaking, we are not comfortable (with the investigation.) Brokerages and banks run on two different systems that cannot be measured by a single stick,” said an executive of a brokerage firm.

An executive of another securities firm said that his company is not so pressured by the upcoming investigation itself.

“But things may be different for Western brokerage firms,” he noted.

Regarding the propriety of state intervention in private sector pay, an expert who asked not to be named said, “The state still holds shares in a number of banks, including Woori, KB Kookmin and KDB Daewoo, which gives the FSS a due cause for such inspection.”

“But it seems awkward to ask foreign-invested financial firms to open up too,” he said.

By Chung Joo-won (joowonc@heraldcorp.com)