Regulators have decided to publicly shame financial firms with the lowest score in the consumer protection segment.
Seventeen firms given the lowest grade of “class 5” by the Financial Supervisory Service have been ordered to publicize the shameful record at entrances of their branches and online homepages in “red letters” for three months.
The 17 firms which drew frequent petitions last year included three first-tier banks and two credit card issuers: KB Kookmin Bank, NH NongHyup Bank, Standard Chartered Bank Korea, Shinhan Card and Lotte Card.
Among the others were Allianz Life Insurance, ING Life Insurance, PCA Life Insurance, Lotte Insurance, Dongbu Securities, Tong Yang Securities, Hyundai Savings Bank and Chinae Savings Bank.
The number of their combined branches nationwide surpassed 3,000. KB Kookmin Bank topped the list with 1,130, followed by NH NongHyup Bank with 1,187, Standard Chartered Bank Korea with 326, Lotte Insurance with 100 and Tong Yang Securities with 88.
FSS officials said they would expand the “name and shame” sanction in a bid to raise consumer protection in the overall financial market.
Some brokerages were found to have invited frequent complaints from customers due to breakdowns or glitches in their online trading systems over the past few years.
Petitions against some insurance firms filed with the FSS by consumers cited irregular application of contract terms for insurance payments.
Customers of one bank suffered losses due to irregular terms in sales of the bank’s financial products, including loans. A lender was also implicated in dubious loan agreements with small and mid-sized enterprises.
Their grade of class 5 means that they were “poor” in resolving customers’ complaints throughout the past year. The FSS announced their assessment for their 2013 performance last month.
In the commercial bank sector, Daegu Bank and Kwangju Bank received the highest grade of class 1 (or excellent), followed by the Industrial Bank of Korea, Korea Exchange Bank, Kyongnam Bank, Busan Bank and Jeongbuk Bank with class 2 (or fine).
Class 3 and class 4 indicate average and insufficient service, respectively.
Some of the 17 firms expressed discontent with the fresh regulatory measure. One executive said the FSS did not provide a long enough grace period to deal with the new disciplinary action.
Supervisory officials, however, said that the firms deserved to be censured, as they are judged to have made little effort to improve their customer services.
By Kim Yon-se (firstname.lastname@example.org)