Implementation of Model Guidelines for Banks, Insurance, and Savings Banks Starts Tomorrow
Financial Investment Sector to Follow from the 23rd... Mutual Finance by End of This Month
The financial sector has decided to restrict charging real estate project financing (PF) fees solely for maturity extensions and to abolish duplicate fees. The improved real estate PF fee practices will be applied retroactively to existing contracts.
According to the Financial Supervisory Service on the 16th, financial associations including the Korea Federation of Banks, the Life Insurance Association, the General Insurance Association, and the Korea Federation of Savings Banks have finalized the establishment of the "Real Estate PF Fee Model Code (Guidelines)." The associations will apply these model guidelines to their member companies starting from the 17th. This is a follow-up measure based on the "Real Estate PF Fee System Improvement Plan" announced at the joint meeting of the financial sector and construction industry last November.
First, the scope of fee imposition will be limited to compensation for service performance. Fees without separate service provision, such as "penalty fees" imposed for underperformance in pre-sale rates or "maturity extension fees" reflecting increased loan risk upon maturity extension, will be prohibited. Fees repeatedly collected without service provision, such as arrangement, advisory, and participation fees, will also be eliminated.
The number of fee items, which currently reaches 32, will be simplified to 11. This standardizes the definition and scope of fees to enhance reliability and comparability related to fees. Contract-related fees such as contract modification and extension of commitment will be consolidated into "contract modification fees," and fees for business feasibility review and advisory services will be unified as "advisory fees."
With the establishment of the model guidelines, financial companies will also actively provide fee-related information to borrowers. They will expand pre- and post-information disclosure regarding PF service performance details and systematize service history management. Additionally, by establishing and operating basic internal control principles related to PF fees, the autonomous control function of financial companies will be strengthened. The Financial Supervisory Service will inspect compliance status as necessary.
These model guidelines will be applied retroactively not only to newly concluded PF contracts after implementation but also to real estate PF agreements with maturity extensions.
Other financial sectors besides banks, insurance, and savings banks plan to complete and implement the model guidelines within this month. The financial investment sector will prepare the model guidelines by the 23rd, and the credit finance sector is scheduled to establish them on the 24th. Mutual finance and Saemaeul Geumgo will complete the establishment by the end of this month.
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