FSS uncovers numerous trust account violationsThe country’s financial regulator is set to punish banks and brokerages for illegally selling trust products.
The Financial Supervisory Service (FSS) announced the results of a probe into eight companies on Wednesday. The examinations were conducted between August and September, and the institutions investigated were Shinhan Bank, Industrial Bank of Korea, Samsung Securities, Kyobo Securities, KB Kookmin Bank, NongHyup Bank, IBK Securities and Mirae Asset Life Insurance.
While the regulator declined to name the companies in violation of the rules, it did outline the infractions.
In one case, a company imposed varying commission fees on different clients for the same trust product, with the disparity in charges being as much as 30 times. The practice is in breach of the law as financial companies are required to charge the same commission rates to all customers buying equivalent products.
In promoting trusts, a company is not allowed to run advertisements that target people at random, but a probe found instances where texts were sent to many numbers to promote a trust.
With a specified-money trust contract, the trustee manages assets according to a customer’s investment profile and the desired period and purposes of the investment.
The sellers of such products must meet requirements set by the FSS. But in some cases, unqualified employees sold specified-money trusts.
In another breach, a company failed to explain the risks associated with trust products, although the law stipulates that the potential benefits and risks must be clearly disclosed.
The regulator accused some institutions of running trusts in a way that deviates from the requests of clients.
Trust business records must be kept for at least for 10 years, but there were cases in which companies violated that rule.
“We will punish the companies and people engaging in illicit practices,” said an FSS spokesperson.
BY PARK EUN-JEE [firstname.lastname@example.org]