Focus on Further Reductions to 1.4 Trillion Won in Fines
The Securities and Futures Commission under the Financial Services Commission failed on the 25th to reach a conclusion on fines related to the mis-selling of Hong Kong H-Share Index equity-linked securities (ELS) by banks. The agenda item is expected to be finalized at the FSC’s regular meeting after deliberation by the Agenda Review Subcommittee of the FSC to be held on the 26th.
According to the financial authorities on the 25th, the Securities and Futures Commission tabled and reviewed the sanction agenda on ELS mis-selling that afternoon.
An official from the financial authorities said, "The amount of the fine was not decided today," and added, "Further discussion is needed at the Agenda Review Subcommittee on the 26th."
Sanctions on financial companies proceed in the following order: the Sanctions Review Committee of the Financial Supervisory Service, the Securities and Futures Commission of the FSC, the Agenda Review Subcommittee, and then the regular meeting. There had been expectations that the fines would be decided at the Securities and Futures Commission on this day, but the final decision will instead be made after going through the Agenda Review Subcommittee and the regular meeting. The FSC’s regular meetings are scheduled to be held on March 4 and 18.
The financial sector is paying close attention to whether the fines will be further reduced during the deliberation process at the Agenda Review Subcommittee. Earlier, the Sanctions Review Committee of the Financial Supervisory Service lowered the fines from the initially expected level of about 2 trillion won to around 1.4 trillion won. Commercial banks are pinning their hopes on the possibility of additional reductions, noting that they have completed voluntary compensation of about 1.3 trillion won for more than 90% of all victims in accordance with the Financial Supervisory Service’s dispute settlement proposal.
According to the revised Financial Consumer Protection Act of November last year, if ex-post efforts to restore damages are recognized, fines can, in principle, be reduced by up to 50%. If additional requirements such as ex-ante preventive efforts are met, the reduction can be increased to as much as 75%.
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