Banking the old-fashioned way is defended by FSC
Banks are now required to give notice three months ahead of shutting physical branches and will have to offer offline services equal to those available online, according to new rules from the Financial Services Commission (FSC), designed to help senior citizens marginalized by digitization and complicated investment products.
In addition to the three-month notice period for branch closing, Korea Post branches will be brought into service to provide financial services, so that more physical locations are available to those who would prefer to bank the old-fashioned way, according to an initiative announced Sunday by the regulator.
The FSC is also requesting banks to develop separate mobile apps equipped with features and functions designed for those over 65, including larger fonts, audio assistants and quick links to services frequently used by seniors. The FSC will publish relevant guidelines for developers at the banks.
Elderly people have a hard time accessing financial products that are being heavily promoted online and via apps, such as competitive deposit and credit products. According to the FSC, users over 65 only use online banking for simple services, like transfers.
Only 7 percent in that demographic deposit money and 12.4 percent took out credit loans online. This is far below the average rate, which was 74.4 percent for deposits and 58.8 percent for credit loans.
Banks will no longer be permitted to concentrate benefits online. The FSC advised financial institutions to come up with products for the elderly that offer equal benefits, such as premium rates and fee deductions, when bought through offline branches.
Measures to prevent banks from discriminating against the elderly will be drafted into a new law.
Financial institutions that mis-sell investment products will face severe punishments. The FSC plans to follow a zero-tolerance rule against such acts and develop a system where customers can report them to the police and financial regulators. This comes after 48.4 percent of investors that suffered losses from the mis-sold derivative-linked-funds recently were aged over 60.
"In an era of low-interest rates and increased life expectancy, there is a growing interest among the elderly for high-risk investment products, which also increases risks of misselling," the FSC explained in a statement.
The regulator will compel banks to redesign investment statements incorporating easier language and infographics. Punishments will be strengthened for banks and brokerages that do not provide enough information on investment products to elderly customers.
BY KANG JAE-EUN [firstname.lastname@example.org]
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