Financial Supervisory Service Investigates Allegations of 'Kkeokgi' in Commercial Banks' COVID-19 Loans

[Asia Economy Reporter Kim Hyo-jin] The Financial Supervisory Service (FSS) announced on the 1st that it is investigating allegations of 'forced bundling' by some commercial banks handling loans for small business owners related to the novel coronavirus infection (COVID-19).

The FSS has instructed Woori Bank and Hana Bank, where forced bundling allegations have been raised, to conduct internal inspections. The FSS plans to review the results of these inspections to decide whether to proceed with further investigations or examinations.

It is also known that the FSS is considering expanding the investigation to all banks that handled small business owners' 'COVID loans.'

Forced bundling refers to unfair sales practices where banks or others compel customers to subscribe to other financial products such as savings deposits, insurance, credit cards, or funds during the loan consultation or execution process.

Under the current Banking Act, forced bundling is defined as an 'unfair sales practice' that may undermine the order of fair financial transactions. A fine of up to 100 million KRW can be imposed.

In April, when financial support related to COVID-19 began in earnest, the FSS sent an official letter to the banking sector urging them to be cautious to prevent unfair sales practices against borrowers during the loan process.

The FSS has stated that if these allegations are proven true, they will strictly punish the acts considering that they were committed against those struggling due to COVID-19 and that national finances were involved in the COVID-19 related financial support.

This content was produced with the assistance of AI translation services.