Samsung, Shinhan and Hyundai banned from starting new biz

By Kim Jae-won

Korea’s three major credit card issuers ― Samsung, Shinhan and Hyundai ― have been banned for a year from starting new businesses that require regulatory approval because they illegally offered their customers’ private information to sales agents.

The Financial Supervisory Service (FSS) said Friday it had reaffirmed its sanctions against Samsung, Shinhan and Hyundai cards in November, refusing to give them any new business licenses for a year. The three companies were accused of letting sales agents review customers’ information without permission.

“Our Discipline Examination Committee decided to reject the credit card firms’ petition to tone down the punishment, down to the issuance of mere warnings,” the FSS said.

“The committee concluded that it should penalize financial firms neglecting to manage their customers’ information strictly by law and principles.”

The announcement came amid credit card firms seeking new revenue sources after the government and the ruling party lowered the fees the companies can charge retailers and merchants.

The Financial Services Commission and the Saenuri Party agreed to cut credit card firms’ fees in November on small stores that make less than 200 million won a year to 0.8 percent from 1.5 percent, apparently seeking to win more votes from the owners of the small stores before next month’s general election.

As credit card firms are expected to post lower earnings this year because of the change, their parent groups are planning to share the burden with their affiliates. Shinhan Financial Group said it had rearranged its 2016 budget with other subsidiaries after the cut to reflect the expected losses.

“We could not set our growth goal this year because our credit card affiliate is estimated to have made less profit this year due to the lowered fees,” a Shinhan spokesman said.

He said it is hard for a credit card firm to diversify its revenue because it only has two main revenue sources: fees from retailers and interest from loan servicing.