Outgoing Financial Supervisory Commission (FSC) Chairman Chen Yuh-chang (陳裕璋) was a good supervisor, but lacked the boldness and communication skills needed to enable participants in the financial market to cope with the fast-changing landscape, academics said yesterday.
The academics made the remarks after Premier Jiang Yi-hua (江宜樺) unexpectedly replaced Chen with Vice Minister of Finance William Tseng (曾銘宗) yesterday afternoon amid a partial Cabinet reshuffle.
Following Jiang’s announcement at a press conference, Chen issued a lengthy statement in the evening defending his stance on various policy issues and said he regretted that some people had interpreted his attempts to strengthen financial supervision as hindering economic development.
The 57-year-old financial regulator said he will not accept any other government position, because political officials should stand by their beliefs.
Chen has been at odds with economy and technology officials over online payment services, the inclusion of the financial sector in free economic pilot zones and electronic ticketing, among other things.
“The commission under Chen’s stewardship has been squeaky-clean, but somewhat wanting on proactive measures to remove roadblocks that slow the development and competitiveness of domestic financial services providers,” Norman Yin (殷乃平), a professor on money and banking at National Chengchih University, said by telephone.
Jan Hung-tze (詹宏志), chairman of PCHome Online (網路家庭), the nation’s fourth-largest Internet portal, recently criticized Chen for refusing to allow non-financial firms to offer online payment services — also known as third-party payment services — even though the practice is common in China and many other countries.
In a commentary piece published by the Chinese-language Apple Daily on Thurday last week, Jan said that the government might as well abolish the FSC as its antagonizing of the private sector undermines government efforts to invigorate the economy.
During his tenure, Chen insisted on limiting online payment services to banking institutes to ensure safer online shopping and rejected plans to ease regulations governing electronic ticketing and account transfers, citing concerns over consumers’ rights and money laundering.
Chen also said in the statement that he is receptive to the consolidation of the nation’s financial sector, but believes that companies that want to initiate mergers or acquisitions need to demonstrate the soundness of their finances and corporate governance.
In March, the commission thwarted Taishin Financial Holding Co’s (台新金控) plan to acquire the local unit of New York Life Insurance Co because of its above-average double leverage ratio.
The commission has technically barred life insurers from buying commercial properties in a bid to rein in property and land prices.
Yin said that the FSC should focus its attention on policing the market and allow financial players more room to grow.
“The commission is spending too much energy finding faults with financial firms and fails to look at things from a broad perspective,” Yin said.
Some firms have complained about punitive measures for similar violations, the academic said.
Under Chen, the commission’s strict harness has helped lower the nation’s bad loan ratio to a record low, but the financial sector’s contribution to GDP growth has continually declined, Yin said.
Shen Chung-hua (沈中華), who teaches finance at National Taiwan University, said Chen and the FSC should have been more active in communicating with companies to resolve the unnecessary standoff that ensued over policy differences.
“Chen is not a bad regulator, but the public and financial firms expect more in the face of growing economic competition from abroad,” Shen said.
However, Chen argued that the commission has been helpful in boosting the economy, pointing to the increase in bank loans to small and medium-sized enterprises.
Chen, who is considered a protege of President Ma Ying-jeou (馬英九), cautioned that economic development plans must not be carried out at the cost of compromising financial stability.