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Chief regulator warns against 'incomplete' sales of new bank account

All News 11:46 March 03, 2016

SEOUL, March 3 (Yonhap) -- The chief of South Korea's financial regulator on Thursday vowed tough measures against any sales of the new individual savings account (ISA) without informing consumers of its risks amid rising concerns over possible losses from the much-hyped product.

Starting March 14, local banks and brokerage houses will introduce the ISA, where customers can manage a wide range of financial products such as funds and stock investment accounts by signing up with a single institution.

The new banking platform has drawn attention from customers as the government will offer tax exemptions of up to 2 million won (US$1,624) on profits.

Consumer groups, however, have voiced concerns over the possibility of so-called "incomplete sales," where financial institutions may fail to give enough information to consumers about the product such as its detailed contract terms and risks.

"We adopt a zero-tolerance policy against any incomplete selling of the ISA, and will sternly deal with any violations," Yim Jong-yong, chief of the Financial Services Commission (FSC), said in a regular press briefing.

"We will set up a task force to conduct a thorough monitoring of the market as a pre-emptive measure," he added.

Pointing to the heated competition among financial entities to lure in more customers, the chief said the authorities will set up infrastructure to track each institution's profits regarding the ISA, so as to boost healthy competition among them.

"One-off events may attract customers but the effects of such strategies will be short-lived. We will establish a profit-comparison system around the end of next month so as for consumers to evaluate financial entities based upon their performance," Yim said.


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