FSS chief calls for change in culture of banks to prevent financial incidents

The chief of the financial regulator on Wednesday stressed the need to change the very mindset of bank officials to prevent financial incidents such as incomplete sales.

Lee Bok-hyun, head of the Financial Supervisory Service, made the remark in a meeting with the heads of 20 banks in South Korea.

"To prevent financial accidents, including incomplete sales, a change in the mind and conduct of bank officials is most important," Lee told the meeting. "I ask the bank management to actively spearhead efforts to reestablish organizational culture."

The remark comes after the financial regulator advised local banks to voluntarily compensate their customers who invested in equity-linked securities products tracking Hong Kong's H index for incomplete sales.

Such incidents, Lee said, "not only undermine the reputation of banks, but also impact their fiscal soundness that can threaten their own survival."

"There is a need to boldly change the 'organizational culture' so a law-abiding attitude and strong work ethics can spread through all bank employees. Chief executive officers, especially, need to create a 'culture of speaking up' where any employee can raise issues when they detect incomplete sales or the possibility of a financial accident," he added.

The FSS chief also stressed a need to change the banks' incentive systems to this end.

"I believe the banks' culture that rewards short-term performances played a role in the ELS incident. I hope this incident will mark the start of changing the incentive system where banks put customers' interests before their profits" Lee said. (Yonhap)