Financial Supervisory Service to Rationalize Fees for Savings Banks' Corporate Overdraft Loans

Fair Finance Promotion Committee Reviews 3 Tasks
Improving AI Consultation Inconveniences for Elderly Financial Consumers
Also Improving the Practice of Bundling Financial Products

Financial Supervisory Service, Yeouido, Seoul. Photo by Younghan Heo younghan@

The Financial Supervisory Service (FSS) will pursue three tasks: rationalizing and increasing transparency of corporate limit loan fees at savings banks, improving inconveniences faced by elderly financial consumers when using AI consultation at financial company customer centers, and reforming the practice of bundling financial products to induce subscription related to limited transaction accounts.

On the 23rd, the FSS held the 5th Fair Finance Promotion Committee meeting and reviewed the three tasks, including rationalizing and increasing transparency of corporate limit loan fees. Some savings banks had no upper limit on fee rates, used unreasonable calculation methods, and lacked procedures for fee comparison and selection, which restricted the rights and interests of borrowers such as small and medium-sized enterprises using corporate limit loans.

Accordingly, the FSS plans to improve the fee calculation method for corporate limit loans at savings banks rationally, reduce the burden on financial consumers, and enhance their rights by strengthening fee rate disclosure and guaranteeing the right to choose the fee application method. Contract fees will be charged only for the contract period, and the calculation method will be improved so that the fee rate decreases as the limit utilization rate increases for unused fees. The Savings Banks Association website will disclose contract and unused fee rates by savings bank to guarantee borrowers' right to know, and establish procedures allowing borrowers to directly choose the more advantageous method between contract fees and unused fees according to their fund usage plans.

To make it easier for elderly financial consumers to communicate with general counselors as well as AI consultation when using financial company customer centers, related guidance procedures will also be improved. This decision aims to resolve the rejection and inconvenience elderly financial consumers, who are relatively vulnerable to AI and digital environments, feel during AI consultation. In some financial companies, elderly financial consumers are required to go through AI consultation first without being given the option to connect to a general counselor, and guidance on how to connect to a general counselor is insufficient.

Therefore, the FSS plans to improve guidance procedures by ▲allowing elderly financial consumers to choose between AI consultation and general counselors at the initial connection guidance ▲connecting elderly financial consumers whose customer information is registered to general counselors instead of AI consultation ▲continuing to connect to AI consultation first as currently done, but clearly guiding and facilitating connection to general counselors during the AI consultation process. The FSS also stated it will guide financial companies planning to introduce AI consultation to establish systems considering financial consumers' choice and convenience.

The FSS will also improve the practice of unnecessary bundling of financial products by mandating guidance on the verification procedure of the purpose of financial transactions required for converting limited transaction accounts to general accounts. This measure responds to ongoing criticism that some financial companies do not sufficiently inform financial consumers eligible for general account conversion about the necessary verification documents for confirming the purpose of financial transactions, and instead impose conditions such as changing salary accounts, issuing credit cards, or subscribing to savings products to bundle financial products.

The FSS plans to incorporate into financial companies' work procedures the requirement to provide representative verification document guidance notices at branches and websites, and to induce financial consumers who can submit verification documents to convert to general accounts without unnecessary confusion. For financial consumers unable to submit verification documents, financial companies will be obligated to inform them of general account conversion requirements such as financial transaction performance.

Kim Mi-young, head of the Financial Consumer Protection Division at the FSS, said, "The tasks to alleviate fee burdens on struggling small and medium-sized enterprises and to resolve the unreasonable financial practice of bundling financial products for consumers wishing to lift limited transaction accounts were appropriately addressed." She added, "While technological innovations such as AI are driving changes in finance and improving overall financial accessibility, it is a desirable direction, but we ask the industry to work together to ensure that digitally vulnerable groups do not experience inconvenience in using financial services during the establishment of related systems."