FSS targets unfair bank fees levied against SMEs
Small and midsize companies that have been charged more by financial institutions for services to hedge foreign exchange risks will see their fees halved, the country’s financial regulator said yesterday.
According to the Financial Supervisory Service, financial institutions will be advised to lower their commissions for hedging services for SMEs, which have been charged triple the amount paid by large companies.
The regulator said fees will go down by 50 percent at all financial institutions by April.
As of the first half of this year, banks charged SMEs 0.14 percent commission for forward exchange transactions compared to 0.05 percent for large companies. The higher commission fees are because SMEs have lower credit ratings.
“We have been putting our efforts to improve the rights of financial consumers - including SMEs - by correcting bad and irrational financial practices,” said Kwon In-won, deputy governor at the FSS. “This time, based on the consumer complaints we have received, we decided to raise the issue of some of the unfair practices in the industry like excessively high financial costs to SMEs and low-income households.”
The FSS said it will ask financial institutions to return about 2.9 billion won ($2.75 million) worth of interest rate spreads to SMEs that have been charged on government-backed loans at excessively high interest rates from June 2010 through September. According to the regulator, financial institutions are not allowed to charge spreads on government-guaranteed loans. Also, they will be advised to return about 18.1 billion won worth of floating interest rate charged to SMEs without their consent when extending loan periods.
“We have advised financial institutions to give back the wrongfully collected amount to borrowers before the end of the month,” said Kwon.
BY LEE EUN-JOO [email@example.com]