Financial companies let off the hook on investigation delay

The nation’s financial authorities may be frustrated over the lack of progress on sanctions for KB Financial Group, but other financial firms appear to be relieved to stay away from the regulator’s probing eye.

This was especially true for ING Life Insurance, which has been caught refusing to pay death benefits, along with NH NongHyup Card and Lotte Card, both of which face punishment for customer information leaks that occurred earlier this year.

Wary of the growing sense of complacency, the Financial Supervisory Service has now resolved to wrap up the much-delayed probe into KB Financial and KB Kookmin Bank by the end of this month, according to officials on Tuesday.

Early in June, the FSS said it would be handing down sanctions on some 120 KB Financial officials, including group chairman Lim Young-rok and bank president Lee Kun-ho. Both chiefs were held responsible for a chain of misconduct including information leaks, loan fraud and a leadership feud over the replacement of the bank’s computing system.

The sanctions were slated to take effect in late June unless the corresponding officials prove themselves clear of the given charges, but the entire process has been put on hold.

The FSS had been determined to deal a blow to KB in hopes of sending out a message to the entire financial industry ― that severe penalties would be handed down for malfeasance ― but it was met with opposition from other government arms, namely the Financial Services Commission and the Board of Audit and Inspection.

Due to the ongoing discord among the regulators, it is now uncertain whether the FSS will be able to enforce its punitive measures as planned, observers noted.

Furthermore, other firms that are awaiting penalties have fallen off the radar.

ING Life Insurance was earlier discovered to have failed to pay about 20 billion won ($20 million) in death benefits for cases involving suicide, violating its insurance contract provisions, according to FSS officials.

Sanctions, however, were put off to the end of July at the earliest and possibly to August, giving way to the KB case and earning time for the insurance industry.

Should the FSS order ING Life to make the due payments, it could touch off a chain of insurance lawsuits amounting up to hundreds of billion won as most of the nation’s top insurance firms are accused of similar wrongdoings.

Faulty credit card companies such as NH NongHyup Card and Lotte Card, too, are taking a moment to catch their breath after months of investigation over the personal information leak which troubled the country earlier this year.

Over 10 of the leaders of the nation’s top banks and card companies are currently on the FSS’ penalty list, along with KB officials.

By Bae Hyun-jung (tellme@heraldcorp.com)