Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Investors to get up to 80% compensation for DLF losses
By Kim Bo-eun
The Financial Supervisory Service building on Yeouido, Seoul / Korea Times file
By Kim Bo-eun
The Financial Supervisory Service (FSS) has ruled that banks should offer compensation of between 40 percent and 80 percent of money lost to victims of mis-selling of derivative-linked funds (DLF) that wiped out as much as 98 percent of the principal of investments, the regulator said Thursday.
This is the highest level of compensation the authority's dispute settlement committee has concluded so far.
"For the first time, we reflected in the compensation level the fact that banks' excessive profit-seeking sales strategies and poor internal control led to large-scale mis-selling and caused a social stir," an FSS official said.
Previously, the FSS decided on the level of compensation based only on the wrongful practices of sales staff.
The authority said that banks should offer 80 percent in compensation for a 79-year-old dementia patient who had trouble hearing and had no experience in investments.
The six cases filed with the dispute settlement committee this time were all determined to be cases of mis-selling.
In the cases, sales staff at banks did not recommend the derivative option after checking the investment tendencies of the investor, but acted “aggressively” after the investor was persuaded to sign up for the option.
In addition, sales staff, despite recommending high-risk options, stressed the probability of loss was zero percent and that the options were safe. They did not explain the risks, including the possibility of losing the entirety of the principal.
The banks will determine compensation of between 40 percent and 80 percent if both the applicants and bank agree to it.
The FSS said that the same compensation standards will apply for the remaining cases. A total of 276 cases have been filed as of Nov. 30.