FSS Checks Sale of Financial Products at Banks
By Na Jeong-ju
Staff Reporter
The Financial Supervisory Service (FSS) said Monday it has launched an on-site inspection of banks to check whether they are following FSS guidelines on the sale of financial products through their branches and the Internet.
The regulator has made it compulsory for banks to disclose potential investment risks of derivatives and funds to customers before they sell them.
The measure was in response to rising consumer complaints about financial products sold at banks, which allegedly failed to give proper information about potential losses of their investment products in order to increase their sales.
The FSS said it will randomly choose bank branches to check whether they are keeping rules on the sale of financial products. Violators would face fines and other disciplinary action, the regulator said.
``Many customers had complained about the ways banks sell their financial products. Some banks didn't inform customers of potential risks of their products,'' the regulator said. ``We toughened related rules in April to correct the practices and to enable customers to choose investment products with more and better information.''
As banks have expanded their non-banking businesses, sales of derivatives and funds have risen sharply at bank branches. Banks have also increased the number of products sold exclusively through the Internet.
``While the fund and derivatives markets have seen rapid growth, there has been little effort to improve consumer satisfaction,'' the FSS said. ``We've ordered banks to enhance systems to minimize potential damage to customers.''