Six financial firms have been named by South Korea’s financial regulator as the first target of a comprehensive inspection that aims to look into potential companies that lack consumer protection practices and internal control among others.
The six companies are NongHyup Bank/NongHyup Financial Group, Hyundai Life Insurance Co., Mirae Asset Daewoo Co., Korea Asset Investment Trust Co., Shinhan BNP Paribas Asset Management Co., and KB Capital Co.
The Financial Supervisory Service said that the six financial firms were selected as they are scheduled to receive management evaluation this year, which will ease burden on financial companies as the comprehensive inspection can cover a separate compliance inspection that follows the management evaluation when problems are identified.
To ease such burden, the financial regulator said, the comprehensive will be replaced by the compliance inspection that was resumed this year after three years of pause from 2015 as its effectiveness was questioned.
To address customary and across-the-board inspection practices, the FSS said that it will introduce an incentive compatible inspection system from next year, which incentivizes financial companies to self-manage risk by exempting those with outstanding internal control from the comprehensive inspection.
When it comes to how to choose companies subject to the inspection, the FSS said it will not only consider evaluation results of their performance in meeting supervision targets, consumer protection and appropriateness in internal control but also their overall influence on the financial market.
By Kim Dong-eun and Lee Eun-joo
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