Financial authorities vow to stop lending fraud

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Financial authorities vow to stop lending fraud

Korea’s financial authorities vowed to protect customers from interest rate overcharging by banks on Thursday, following findings that three banks - Kyongnam Bank, KEB Hana Bank and Citibank - charged customers excessive interest rates on more than 12,000 loans.

The Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) issued a joint statement on Thursday, calling on banks to swiftly carry out their plans to compensate customers who were overcharged.

“We hope that the banks act on the compensation plan as soon as possible,” the two regulators said.

The joint statement contradicts speculation that the two financial regulators were at odds about the case.

While the FSS unveiled details of the interest rate manipulation, Choi Jong-ku, head of the FSC, played down the possibility of punishing the banks themselves earlier this week.

The two agencies went on to note that they will come up with measures to prevent similar cases from happening in the future.

The FSS said that it will try to ensure that interest rates for loans are determined transparently.

The regulator also proposed a requirement that banks notify their clients if the interest rates on their loans change.

The FSS carried out an investigation into nine banks in January and February and found 12,279 cases of interest rate manipulation last week.

About 12,000 cases came from Kyongnam Bank, a banking unit under BNK Financial Group, so the FSS carried out a follow-up probe on the bank and other banks with headquarters outside of Seoul.

Kyongnam Bank said that clients paid higher interest rates due to a mistake.

Korea’s financial regulator is investigating whether the bank intentionally overcharged them or there was a fundamental lack of oversight, as more than 100 of Kyongnam Bank’s 165 branches were implicated.

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