Following a week of flip-flops over automatic teller machine (ATM) transfers and cash-card advertisement bans, critics have started to worry about whether the Financial Supervisory Commission (FSC) is losing its authority to independently make and stick by policy.
The Ministry of the Interior meddled in the commission's duties last week by unilaterally announcing that a limit would be imposed on the amount of money transferred via ATMs. This move led to a flood of public complaints and sharp criticism over the commission's failure to exercise its authority.
Earlier this month the FSC announced plans to ban lenders from airing television, movie and radio advertisements for cash cards starting May 1, in a bid to discourage consumers from taking out high loans. But in an about-face last week after mounting pressure, the commission said it may backtrack on the plan.
"The commission is not clear about its role at all," Chinese Nationalist Party (KMT) Legislator Lai Shyh-bao (
Lai added that the commission has often failed to make a detailed and comprehensive evaluation of its proposed policies. It has often leaked information before finalizing policies, which damages the commission's professional image and credibility, Lai said.
The Cabinet-level commission has often failed to address issues they are supposed to manage -- such as the ATM transfers -- while paying too much attention to less important things like the bans on cash-card ads, said Lai, who is also professor at the Graduate School for Business Administration at National Chengchi University.
The commission was established on July 1 last year after the legislature passed the Financial Supervisory Commission Organizational Law (金融監理委員會組織法) in July 2003.
The commission merges government agencies which were previously under the Central Bank of China, the Central Deposit Insurance Corp and the Ministry of Finance into one umbrella agency, in a bid to centralize regulation of the nation's banking sector.
But since July last year, the commission has several times flip-flopped on its policies. It has indicated a possible delay on increasing the stock market's daily trading limit after Premier Frank Hsieh (
"The organization law bestowed an independent status on the commission ... and the commission should not surrender to pressure coming from its superiors, peer departments and others," People First Party Legislator Christina Liu (
Liu said she couldn't believe the commission failed to stick to its stance on the ATM issue and make professional evaluations, such as how much society would have to pay for the ATM restrictions.
Both Liu, who used to be head of the Graduate Institute of Finance at National Taiwan University, and Hsieh Wen-cheng (
In response, Hsieh said the commission's function in financial supervision should be independent, but when it comes to financial regulations, the commission should negotiate with other related departments.
The idea of setting up the commission dates back to the KMT administration when Paul Chiu (邱正雄) served as Minister of Finance in 1999. At the time the ministry submitted a draft organizational bill regarding the planned agency to the legislature, but it was shelved until Shea Jia-dong (許嘉棟) took the ministry's helm in 2000 when the Democratic Progressive Party beat the KMT in the presidential election.
While the commission's organizational bill was still left untouched in the legislature during the next four years, the idea of forming a government agency combining the administrative and supervisory roles of the banking, securities and insurance industries remained.
However, the commission is now facing uncertainty as the Cabinet is mulling whether the commission's policy-making and supervisory roles should be split up. It may return the administrative role to the Ministry of Finance.
If the commission is only responsible for financial supervision, it could retain its independence without needing to face questions and intervention from the legislature, Lai said.
However, he added that the finance ministry, which controls many state-run financial institutions, should get rid of all state-owned shares before taking over the financial policy-making power, in order to avoid a conflict of interest.
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