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Regulators vow more stern actions on practices burdening borrowers
Financial regulators plan to take disciplinary measures against a group of banks for engaging in irregular lending practices, based on a year-long investigation.
A number of retail customers in the banking sector will face punitive measures for their urging of customers to purchase financial products such as deposits and insurance products in return for having their loan applications approved, officials at the Financial Services Service said Wednesday.
The Financial Services Commission, the decision-making body of the FSS, plans to levy penalties against several banks for habitual irregular loan issuances which created hardships for borrowers.
Among the alleged rule-violators are Citibank Korea, Standard Chartered Bank Korea, Hana, Shinhan, Woori, the Industrial Bank of Korea, Nonghyup Bank and the National Federation of Fisheries Cooperatives.
A task force of the FSS conducted inquiries on eight banks between July and September in 2011 and the regulator carried out periodical probes on two commercial banks.
In case of the IBK, the state-run bank forced many small- and mid-sized enterprises or individual borrowers to buy financial products in exchange for receiving loans, an FSS official said.
The FSS looked into loan-related documents by dispatching a group of inspectors to the headquarters of IBK and Shinhan Bank in July, and Hana Bank in August.
The task force was set up a year ago under FSS Gov. Kwon Hyouk-se’s initiative to better protect consumer rights and curb irregularities.
The financial authorities have enhanced their crackdown on the practice of linking bank credit to purchases of their financial products.
This year, commercial banks will also face a strict regulatory crackdown for possibly irregular practices in sales of “bancassurance” products.
The FSS plans to dispatch a group of inspectors to the headquarters of major banks such as Kookmin, Woori and Hana, starting in the coming weeks.
In the same vein, several insurance companies, including Samsung Life and Korea Life, could be the target of close monitoring as to whether they sought unauthorized business activities in coordination with banks.
The probe is likely to continue until the third quarter of this year.
Top regulator Kwon commented on “rampant irregular practices in the insurance and bancassurance sector” during an interview with The Korea Herald in February.
An FSS official said possible irregularities included hiring employees ineligible for sales of insurance policies and failing to inform consumers of details on insurance product terms.
The coming probe in the insurance and bancassurance business comes after the FSS’ year-long investigation into banks’ irregular lending practices.
By Kim Yon-se and Kim So-hyun
(kys@heraldcorp.com) (sophie@heraldcorp.com)
Financial regulators plan to take disciplinary measures against a group of banks for engaging in irregular lending practices, based on a year-long investigation.
A number of retail customers in the banking sector will face punitive measures for their urging of customers to purchase financial products such as deposits and insurance products in return for having their loan applications approved, officials at the Financial Services Service said Wednesday.
The Financial Services Commission, the decision-making body of the FSS, plans to levy penalties against several banks for habitual irregular loan issuances which created hardships for borrowers.
Among the alleged rule-violators are Citibank Korea, Standard Chartered Bank Korea, Hana, Shinhan, Woori, the Industrial Bank of Korea, Nonghyup Bank and the National Federation of Fisheries Cooperatives.
A task force of the FSS conducted inquiries on eight banks between July and September in 2011 and the regulator carried out periodical probes on two commercial banks.
In case of the IBK, the state-run bank forced many small- and mid-sized enterprises or individual borrowers to buy financial products in exchange for receiving loans, an FSS official said.
The FSS looked into loan-related documents by dispatching a group of inspectors to the headquarters of IBK and Shinhan Bank in July, and Hana Bank in August.
The task force was set up a year ago under FSS Gov. Kwon Hyouk-se’s initiative to better protect consumer rights and curb irregularities.
The financial authorities have enhanced their crackdown on the practice of linking bank credit to purchases of their financial products.
This year, commercial banks will also face a strict regulatory crackdown for possibly irregular practices in sales of “bancassurance” products.
The FSS plans to dispatch a group of inspectors to the headquarters of major banks such as Kookmin, Woori and Hana, starting in the coming weeks.
In the same vein, several insurance companies, including Samsung Life and Korea Life, could be the target of close monitoring as to whether they sought unauthorized business activities in coordination with banks.
The probe is likely to continue until the third quarter of this year.
Top regulator Kwon commented on “rampant irregular practices in the insurance and bancassurance sector” during an interview with The Korea Herald in February.
An FSS official said possible irregularities included hiring employees ineligible for sales of insurance policies and failing to inform consumers of details on insurance product terms.
The coming probe in the insurance and bancassurance business comes after the FSS’ year-long investigation into banks’ irregular lending practices.
By Kim Yon-se and Kim So-hyun
(kys@heraldcorp.com) (sophie@heraldcorp.com)
