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| A placard introducing loan products hangs on an outer wall of a Standard Chartered Bank Korea branch in Seoul in this 2019 photo. / Yonhap |
By Park Jae-hyuk
Standard Chartered (SC) Bank Korea was found to have been poorest among the nation's 16 banks in efforts to inform borrowers of their right to demand rate cuts when their credit ratings improve or their assets increase.
Data the Financial Supervisory Service (FSS) gave to Rep. Kang Min-kuk of the main opposition People Power Party showed Thursday that the U.K. banking giant's local subsidiary got the lowest rating ― 40.6 points ― from the financial watchdog, which conducted "mystery shopping" at 188 branches of the 16 banks and their call centers between Dec. 30 last year and Feb. 7 this year.
The mystery shopping was done after the National Assembly amended the law in December 2018 to better protect the rights of borrowers. Following the enforcement of the law in June last year, domestic banks have had to pay up to 20 million won ($17,000) in fines if they do not inform borrowers when they are entitled to lower interest rates.
To check whether local lenders obey the law, FSS officials visited banks without disclosing their identities and deducted points off banks when their employees could not explain the rights of borrowers accurately or when they were not aware of details about the revised law.
Although SC Bank Korea's branches scored 47 points, its call center received 29.5 points, lowering the comprehensive score to 40.6 points.
"According to guidelines from financial authorities, we will do our best to give our customers enough information about the right to demand lower interest rates," an SC Bank Korea spokesman said.
Other banks were also neglectful of guaranteeing borrowers their rights because 15 banks among the 16 scored below 60 points.
Among the nation's five major commercial banks, Shinhan Bank had the lowest score of 47.5 points, while NongHyup Bank got 48.8 points, KB Kookmin Bank 49.5 points and Woori Bank 52.4 points. Hana Bank had the highest score of 63.7 points among the 16 banks, but its grade remained "insufficient," a notch above "dull" given to those scoring below 60 points.
All six provincial banks scored below 50 points. DGB Daegu Bank, which scored 45.1 points, had the lowest score in branch assessment among the 16 banks at 39.5 points. Jeonbuk Bank, which received 40.8 points, scored the lowest ― 22.3 points ― in call center assessment.
Another foreign commercial bank here, Citibank Korea, received a comprehensive score of 44.4 points.
"Banks need to make more efforts so the borrower's right to demand lower interest rates can be exercised in accordance with the law which was revised to lighten the burden on borrowers," Rep. Kang said.
The FSS plans to inspect the lenders every quarter after ordering them to submit reform plans.
