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Complaints against financial firms surge 15% amid pandemic

(Yonhap)
(Yonhap)


The number of consumer complaints brought against local financial companies jumped 15 percent on-year in the first-half of 2020, mainly related to the mis-selling of private equity funds and a surge in requests for loans to counter the coronavirus impact, data showed Tuesday. 

According to data from the Financial Supervisory Service, the financial watchdog received a total of 45,922 consumer complaints against securities firms, commercial banks, insurance companies and credit card operators in January-June, sharply up from 39,924 complaints during the same period last year.

Investment-related complaints increased steeply at 83.2 percent to reach 3,733, which centered on heavy losses caused by poor management of private equity funds and recent fund redemption suspensions. 

Starting last year, a series of fund fiascos, including flawed sales of derivative-linked fund products sold by local lenders and brokerages, as well as the suspension of Optimus Fund have swept the financial circles, with investors’ losses nearing a combined 5 trillion won ($4.2 billion) so far, industry data showed. 

Meanwhile, complaints against local lenders rose 30.7 percent from a year earlier to 6,107 as beleaguered households and small business owners, most affected by the protracted COVID-19 outbreak, have increasingly requested for loan repayment moratorium or reduction in lending rates.

To reduce the financial burden of the coronavirus on citizens and businesses, the Korean government last month implemented an additional six-month extension of loan maturities, scheduled to continue until March next year. The recent surge in related complaints came as some borrowers were denied access to delayed loan repayment program due to a lack of certain qualifications, while others found it hard to apply for the new system, officials said. 

Meanwhile, complaints against life and non-life insurance companies stood at 10,873 and 16,156, respectively. Both climbed about 9 percent on-year. The inquiries involved deceptive sales of life insurance products as well as the improper amount of benefits from auto and damage insurance firms.

Also, a total of 3,262 complaints against credit card operators were filed to the FSS in the given period, up 7.3 percent on-year. Difficulties with using the government’s COVID-19 cash relief grants through credit cards were the main causes. 

By Choi Jae-hee (cjh@heraldcorp.com)
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