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.
HK-tied ELS compensation rate determined at 30-65% in 5 key cases
Financial Supervisory Service headquarters in Seoul / Yonhap
By Anna J. Park
FSS announces result of dispute resolution committee meeting
The Financial Supervisory Service (FSS) has determined major financial companies' compensation ratio for mis-selling of Hong Kong stock market-tied equity linked securities (ELS) in five key cases to be between 30 percent and 65 percent, the financial watchdog announced Tuesday.
The decision was reached at the FSS' dispute resolution committee meeting held the previous day.
The committee is a dispute settlement body within the FSS where financial consumers file compensation claims against financial companies.
The decision of the dispute resolution committee holds the same effect as a settlement reached in court, if both parties accept the verdict.
The five cases discussed at the meeting involved compensation cases brought against each of the five banks — KB Kookmin, Shinhan, Hana, NH NongHyup and Standard Chartered Bank Korea — by investors who sustained major losses due to the banks' misconduct.
The compensation ratio determined by the committee was the highest for NH NongHyup Bank at 65 percent, followed by KB Kookmin Bank at 60 percent, Shinhan Bank at 55 percent, Standard Chartered Bank Korea at 55 percent and Hana Bank at the lowest compensation ratio at 30 percent.
The final figures were determined as the dispute settlement committee calculated each financial institution's count of violations, including the violation of suitability principles and prohibition of unfair solicitation, as well as factoring in other key criteria, such as investors' previous investment experiences or purposes of depositing the money at the banks.
If both parties, financial consumers and the banks, accept the proposed decision within the next 20 days, the dispute will be settled accordingly.
With the release of the dispute resolution committee's decisions in the five cases, banks are expected to expedite the remaining compensation procedures by taking them into account as reference.
"With the public disclosure of the calculation of the compensation ratios for each case discussed at the dispute resolution committee, the FSS expects financial companies' arrangements with financial consumers who sustained major losses from mis-selling cases will be more smoothly conducted," an FSS official said, adding that the agency will continue to provide support to ensure swift and effective compensation.
Investors who suffered significant losses from financial companies' mis-selling of Hong Kong stock index-linked ELS products stage protests in front of the headquarters of the Financial Supervisory Service in Seoul, April 24. Yonhap
However, some investors who seek 100 percent compensation are planning to proceed with class action lawsuits against financial companies, regardless of the dispute resolution committee's decision.
The association of investors who lost significant amounts from the mis-selling of the Hong Kong stock market index-tied ELS products said it secured approximately 600 investors nationwide willing to join the class action.