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| Employees enter KB Financial Group's building on Yeouido, Seoul, in this file photo. / Korea Times file |
The Financial Supervisory Service (FSS) is expected to inspect KB Financial Group and its subsidiaries, following the reintroduction its annual comprehensive audit.
It is also set to inspect some local insurance companies, including Hanwha Life.
The regulator revived the audit system this year, despite the Financial Services Commission's initial opposition.
The former Park Geun-hye administration abolished the system as part of efforts to relax rules governing local financial companies.
The last overall inspection was in 2015. The audit was revived under the Moon Jae-in administration to better protect consumers after a series of incidents in recent years.
The FSS decided to inspect the finance companies it determined had the most problems, based on a survey that looked into consumer protection, financial health, internal control, corporate governance structure and the market influence of the firms.
The companies include KB Financial Group, KB Kookmin Bank, KB Securities, Hanwha Life and Meritz Fire and Marine Insurance.
"We are conducting the inspection on a bank, brokerage, life and general insurer," an FSS official said.
The FSS is set to focus on Kookmin Bank's corporate governance and KB Securities' internal control system. Last year, KB Securities was punished after an employee embezzled funds from a customer's dormant account. In the case of Hanwha, the regulator is set to look into unpaid claims and mis-selling.
All finance companies were previously subject to a regular comprehensive inspection. The FSS said it changed the way the inspections are conducted to make them more efficient and alleviate the burden on firms by eliminating unnecessary inspections for those that are complying with regulations.
The FSS notified the subjects of the audit last month and has requested the necessary data before sending officials to the companies for on-site inspections.
Dozens of FSS officials will be sent to the companies for four weeks. Inspections can be extended if companies do not cooperate in providing data.
"The inspection will be carried out for each quarter," the FSS official said. "The subjects of the next inspections have more or less been decided on, based on the results of the prior survey."
The next audit subjects are expected to be Shinhan Financial Group and Samsung Life. The FSS is expected to look into Shinhan's corporate governance.
Samsung Life, meanwhile, is embroiled in a conflict over about 1 trillion won ($858.44 million) in unpaid immediate annuity payouts involving life insurers here. Samsung Life was expected to be the first target of the FSS's comprehensive audit, but the regulator has delayed the inspection.
