Korea’s two financial regulatory bodies agreed to set up an agency aimed at protecting consumers after ironing out many of their differences.

The new agency will be established early next year.

The Financial Services Commission, whose primary role is to set financial policies, and the Financial Supervisory Service, an agency authorized to inspect and punish financial firms that fail to protect consumers, were locked in a battle for influence over the new organization.

FSC officials said on Friday that high-ranking officials from the two agencies met and agreed to go ahead with the plan to set up the new agency.

The FSS also confirmed that a broader agreement was reached over drafting a bill for the new agency, though differences in minor details had to be worked out further.

Under the agreement, the FSS would spin off its existing unit in charge of protecting financial consumers to join the new agency next year, whose personnel and budget would be run independently.

The chief of the financial consumer protection agency will be appointed by the FSS after the FSS head recommends a candidate. The status of the new agency’s chief will be equivalent to the deputy head of the FSS.

The FSS earlier proposed it would take over the authority of inspecting and punishing irregularities in the financial sector, but the proposal was ditched in the negotiation process.

To avoid conflicts with the existing regulatory structure, the envisioned agency would not have any power to inspect and place punitive measures on financial firms in the field of consumer protection.

The revised draft for a bill will be formally reviewed at the FSS on Nov. 16, before consulting with other government agencies to push ahead with the plan.

The turf war over the management of the new agency between the two agencies dragged on amid the growing public distrust of the regulatory bodies as some FSS officials were found to have improper ties to the suspended savings banks.

By Yang Sung-jin (insight@heraldcorp.com)