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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] SEOUL, Oct. 20 — South Korea’s Financial Supervisory Service (FSS) will hold a disciplinary review committee on October 23 to determine the level of fines to be imposed on domestic banks for the mis-selling of equity-linked securities (ELS) tied to the Hong Kong Hang Seng China Enterprises Index (HSCEI).
According to financial industry sources, the FSS has notified several commercial banks of the meeting schedule. The regulator plans to prioritize cases involving “recording obligation violations”, which are approaching the five-year statute of limitations for fines early next year.
The FSS also intends to finalize the penalty levels for unfair sales cases before the end of this year, as punitive fines under the Financial Consumer Protection Act are calculated based on the transaction (sales) amount. “The agenda items for this month’s review concern non-contentious cases,” an FSS official said, adding that “the main cases will be concluded no later than year-end.”
Financial institutions are reportedly hoping for leniency following a recent amendment that allows up to a 75% reduction in fines for firms that compensate customers voluntarily or implement robust recurrence prevention measures. Earlier this year, the banking sector carried out voluntary compensation of approximately 1.3 trillion won (US$940 million) for affected investors.
However, market observers note that this will be the first major disciplinary case under newly appointed FSS Governor Lee Chan-jin, who has emphasized strong consumer protection, raising concerns that the penalties could be set as a precedent for stricter enforcement.
알파경제 Paul Lee 특파원(hoondork1977@alphabiz.co.kr)
