Classification of main types and review of compensation standards… “Expedited procedure possible”
Starting next month, H ELS index losses will become a reality … On-site inspections also begin early With a large number of Index-linked equity-linked securities (ELS) H Hong Kong comes to maturity starting next month, the Financial Supervisory Service is considering a plan to introduce ‘main types’ of errors. – sale.
As large-scale dispute mediation is expected, it is believed to be realistic to set out the main types of mis-selling in advance and introduce compensation standards accordingly.
◇ Categorize the main types in advance… Age, investment experience, etc. are likely to be included.
According to the financial authorities and the financial sector on the 24th, the Financial Supervisory Service is working on classification by type based on various complaints related to ELS linked to the H index.
A senior official at the Financial Supervisory Service said, “We are creating the main types of mis-selling in advance,” and added, “We will establish standards on how to bear the burden of losses for each type.”
He said, “Accordingly, banks will be able to classify and act on tangible cases (complaints) and those that are not.”
Another high-ranking official also said, “We are working on a classification based on how the people who filed the complaint describe the circumstances of the incomplete sale and whether it is proven when verified with the bank,” adding, “We need a similar categorization. ways to avoid problems.” “If there is an explosion, a quick compensation process will be possible,” he said.
As there is a significant proportion of elderly people among H-index ELS investors and there are many claims that they have been recommended products that do not match their investment tendencies and subscription purposes, it is expected that key facts and corresponding types which can recognize mis-selling. be introduced.
Whether you have experience investing in high-level investment products or not can also be included in the type.
Accordingly, it appears that types that are difficult to see as cases of damage due to incomplete sales will also be filtered out.
◇ 9.2 trillion won due in the first half of next year… Losses emerged from January
The Financial Supervisory Service has not yet started a formal examination of banking securities.
This is because the loss has not yet been confirmed.
For this reason, the current work of the Financial Supervision Service differs from the previous method of conducting dispute mediation by identifying representative cases of incomplete sales revealed through an on-site inspection.
An official from the Financial Supervisory Service explained, “It does not categorize confirmed cases of incomplete sales,” and “It is closer to presenting potential cases of incomplete sales in advance.”
This is because the scale of ELS losses and dispute settlements is expected to be so large that confusion is inevitable without advance preparation.
Starting next month, the ELS maturity of the H index will begin in earnest, and the resulting losses will be confirmed one after another.
According to the H-index ELS explanatory data recently reported by the Financial Supervisory Service to the Political Affairs Committee, the amount of H-index ELS sold by banks that will mature in the first half of next year is equivalent to KRW 9.2 trillion .
The amount due next month alone is 800 billion won.
It is expected to increase to 1.4 trillion won in February, 1.6 trillion won in March, and peak at 2.6 trillion won in April.
At the end of September, the size of the H ELS index with knock-in (loss event section) is KRW 6.2 trillion, and KRW 5.9 trillion (87.8%) will mature in the first half of next year.
As the H index has recently halved from its peak, investors are likely to lose around half of their principal.
The Financial Supervisory Service predicted in a report to the Political Affairs Committee, “The size of the investment itself is very large and the share of the elderly in the banking sector is significant among investors, so there may be large-scale complaints such as incomplete sales. filed.”
At the same time, it is anticipated that major issues will be whether the seller complies with sales principles such as the principle of suitability and whether sales were made in accordance with the purpose of sales regulations under the Financial Consumer Protection Act.
The issues include whether the customer’s situation was correctly identified and a suitable product was recommended for the purpose of subscription, and whether explanations were given in a way that the consumer could understand during the sales process.
Previously, Lee Bok-hyeon, head of the Financial Supervision Service, said, “We investigated a variety of cases, such as whether the customer came with the purpose of requesting a large increase in the amount of spare money even if there was a loss of principal , or does the customer recommend (ELS) instead of a term deposit, saying it is a retirement living fund that should not be missed, and that there is no loss of principal.” “I will look at it,” he said, adding, “Maybe there are some aspects that I need to take responsibility for.”
◇ The inspection is likely to change next month… Observe the banks’ voluntary compensation scheme
The Financial Supervisory Service plans to launch an ‘H-Index ELS Investor Loss Response TF’ and organically proceed with the mediation of consumer complaints and disputes, inspections and actions against the sale of financial companies.
Accordingly, it is expected that a formal examination of paper money will begin next month in line with the realization of losses.
KB Kookmin Bank, the biggest seller, will probably be the first hit.
At a joint inspection meeting related to the H Index on the 22nd, Lee Se-hoon, Secretary-General of the Financial Services Commission ordered, “Based on the results of future Financial Supervisory Service inspections, we must identify any violations strictly financial. companies.”
There are also comments that the banking sector could introduce a voluntary compensation scheme in the form of private conciliation before the Financial Supervisory Service’s dispute resolution process begins in earnest.
Private conciliation is literally a method where financial companies and victims decide on the level of compensation through independent consultation.
The banking sector has already tested a number of private reconciliation methods through the crises of private equity funds in the past such as Calch and Optimus, and the heads of financial authorities are also publicly demanding that banks respond responsibly.
An official said, “Following the crisis of private equity funds, the expectations of financial users (about the level of bank compensation, etc.) have increased, and the ‘breach of trust’ issue that banks have always raised as a shield is not has actually increased. come to the fore, so individual companies are putting together voluntary compensation schemes.” “It could happen,” he said.
/happy news
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