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Watchdog begins deliberations on penalties for banks in product misseling fiasco

All Headlines 10:58 January 16, 2020

SEOUL, Jan. 16 (Yonhap) -- South Korea's financial watchdog on Thursday launched its deliberations on penalties for the heads of two major lenders here over what it earlier determined to be improper selling of derivative-linked products.

The review of disciplinary actions comes after the Financial Supervisory Service (FSS) ruled that about 20 percent of 3,954 sales cases of the two banks may have violated the law or their own internal rules.

The two banks are Woori Bank and KEB Hana Bank.

Watchdog begins deliberations on penalties for banks in product misseling fiasco - 1

The so-called derivative-linked fund (DLF) products were designed to return large profits when the interest rates of specific countries, including Britain and Germany, stayed above a certain level.

However, many consumers here have reported losses of up to or over 90 percent of their investments after interest rates or bond yields in the major economies plunged.

The FSS earlier noted the local banks may have missold the products by failing to provide adequate information or explain the high risks involved to their consumers, telling the heads of the two lenders in advance that they may face "serious" disciplinary actions.

Those submitted to serious disciplinary actions by the FSS are barred from running for reelection as the head of a commercial bank or working for any financial institutions for up to five years, according to the FSS.
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