Financial Supervisory Service Issues Warning for Inadequate Internal Controls at Hyundai Motor Financial Complex Corporate Group

[Asia Economy Reporter Lee Jung-yoon] The Financial Supervisory Service (FSS) has issued a cautionary measure against the Hyundai Motor financial conglomerate group due to deficiencies in internal controls and other areas.

According to financial authorities on the 23rd, the FSS recently inspected the Hyundai Motor financial conglomerate group and notified them of four management cautions and eight improvement items, urging them to strengthen the internal control work organization, reporting system, risk concentration, and management related to internal transactions.

Management cautions and improvement items refer to administrative guidance measures that require financial companies to exercise caution or voluntarily improve.

During this inspection, the FSS found that some overseas affiliates subject to internal control standards and risk management standards within the Hyundai Motor financial conglomerate group were operating without prior review of high-risk internal transactions, management of concentrated risks, and risk transfer management, demanding more detailed management plans.

Additionally, regarding overlapping internal control tasks, the FSS requested strengthening the division of duties and reporting systems among internal control teams and enhancing the operation of early warning systems related to crisis response. They also pointed out the need for caution concerning the concurrent holding of financial company positions by non-financial company executives affiliated with the Hyundai Motor financial conglomerate group.

The FSS further urged attention to the possibility of major shareholder influence, considering that the Hyundai Capital board of directors serves as the final deliberation and resolution body as the representative financial company board of the Hyundai Motor financial conglomerate group.

Financial conglomerate groups must select a representative financial company and regularly inspect and evaluate group-level risks such as capital adequacy. They must also independently implement internal control, risk management, and internal transaction management. Hyundai Motor was designated as a financial conglomerate group last year.