Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Financial firms' mis-selling over past 5 years amounts to 6 tril. won
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By Anna J. Park
More than 30,000 people have been victimized by the mis-selling of funds, trusts, private equity funds and insurance contracts by financial firms over the past five years.
Financial mis-selling occurs when inappropriate or untrue advice is given, or risks related to financial products being sold to customers are not adequately disclosed.
This shocking revelation was highlighted by Rep. Yoon Young-deok of the main opposition Democratic Party of Korea on Wednesday, who received the data from the Financial Supervisory Service (FSS).
The total amount of mis-selling that was detected and sanctioned between 2019 to August this year stood at 6.05 trillion won ($4.45 billion), while the number of subscribers of such problematic products was 33,182.
Among domestic financial firms identified for engaging in mis-selling practices during the past five years, Hana Bank has had the largest amount of mis-selling concerning trust sales of 935 billion won and the largest number of customers, standing at 11,403 for such products. In relation to the issue, Hana Bank received an institutional warning and a fine of 2.16 billion won from the financial authorities in 2o19.
Banks take up the largest portion of the financial pie when it comes to mis-selling, with 3.62 trillion won worth of problematic products detected or sanctioned. Securities companies missold 2.42 trillion won worth of products. The number of victims stood at 19,692 in the banking sector, while the investment sector yielded 5,122 victims due to mis-selling.
As sanctions over mis-selling by some securities firms continue to be imposed throughout this year, including on IBK Securities, Meritz Securities and Hyundai Motor Securities, both the finalized amount and the number of customers to such problematic products are likely to increase further.
Meanwhile, the amount of insurance premiums related to mis-selling sales stood at 6.2 billion won and the number of related subscriptions to such plans stood at 8,368 from 2018 to August this year. In the insurance industry, major cases of mis-selling include violating prohibited acts during solicitation, failing to sign the insured person's handwritten signature and violating the obligation to explain the insurance plans, among others.
"The financial authorities need to thoroughly conduct supervisory roles against financial companies in order to prevent financial consumers from being harmed in difficult economic situations," Rep. Yoon said, vowing to overhaul systems in order to protect vulnerable financial consumers.