Lee Bok-hyun "Hong Kong ELS, Financial Companies Should Also Provide Self-Compensation"

Lee Bok-hyun, Governor of the Financial Supervisory Service, said on the 5th regarding the compensation issue for the large-scale loss incident of the Hong Kong H-Index-based Equity-Linked Securities (ELS), "There may be differences in perspective regarding the scale, but if the financial company voluntarily compensates even a part of the total amount that it agrees with, it could create liquidity from the customer's standpoint, which I think would be beneficial."

Lee Bok-hyun, Governor of the Financial Supervisory Service, is holding a press conference at the Financial Supervisory Service in Yeouido, Seoul, on the 4th. Photo by Kang Jin-hyung aymsdream@

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Governor Lee held a briefing on the 2024 business plan at the headquarters in Yeouido, Seoul, in the morning, stating, "Measures of this kind should not be unilaterally decided without consensus from banks and securities firms," while expressing the above view.

He mentioned that during the previous inspection process, there were signs of incomplete sales in the ELS sales process by banks and other financial companies. He said, "There were mistakes at the frontline counters, but we also need to look at the overall framework," adding, "There is an obligation to present customers with data analyzed by reasonable standards regarding expected losses of (ELS products), but the statistics presented were based on figures excluding the sharp drop in Chinese stocks during 2015-2016. This is a part that financial companies need to reflect on."

Regarding future inspection plans, he said, "Before and after the holidays, we will categorize and systematize the issues revealed by each company and apply them to other financial companies," and added, "If we organize the problems that may arise through additional inspections, I think we can create a responsibility-sharing standard by the end of this month."

Governor Lee also stated about voluntary compensation, "This is not about harassing banks and other financial companies," and explained, "If the customers want 100 and the financial institutions want 50, I personally think that accepting even 50 first is necessary in this difficult economic situation."

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