FSS mulling move to shame lendersThe nation’s financial watchdog is looking into unveiling statistics regarding cases of corruption in the financial sector for the first time in nine years to urge executives and employees to be more vigilant vis-a-vis moral hazards, sources at the Financial Supervisory Service (FSS) said yesterday.
The move comes shortly after a spate of corporate faux pas including KB Kookmin Bank’s changing the terms of customers’ loan contracts without first consulting borrowers, which has incited public anger.
“Many have called for the statistics to be released to the public as financial misdeeds have become so rampant these days,” said an official at the FSS. “We have kept the annual data confidential until now, but we are weighing whether to disclose it.”
The FSS recently released annual data detailing the number of cases and sums relating to such financial misdeeds at banks, non-banks, brokerages and insurance firms up to March 2004. Only a handful of cases after that date have been made public, and only when lawmakers meet each fall and raise certain issues at the National Assembly’s audit and inspection session. According to a document the FSS submitted to the National Assembly’s Policy Committee, 179 such incidents were reported in 2010. It said there were a similar number last year.
“We have been taking the necessary measures to curb such misdeeds, but the number hasn’t dropped off yet,” said the FSS source. “We expect that releasing the data will alarm executives and employees in the financial industry, and it could help curb the number of such incidents.”
The FSS is scheduled to hold a workshop on Sept. 26 with auditors of local banks and bank employees to discuss and find measures to improve internal controls. The financial regulator will urge the invited parties to increase the number of auditors in a bid to ramp up transparency and accuracy amid growing criticism that banks’ poor internal controls failed to prevent their employees from taking liberties with loan contracts.
KB Kookmin Bank has come under fire for changing the terms of a contract of one customer by authorizing a knowingly forged signature at the end of July. The customer, surnamed Lee, filed a complaint with the FSS, and KB responded by issuing a public apology. Kookmin said last week that it conducted an internal inspection and found 9,616 instances of employees ignoring protocol and messing with loan contracts at 881 of its branches.
By Kim Mi-ju [email@example.com]