[디지털데일리 박기록기자] Guidelines for compensation for damage to victims related to losses on Hong Kong H-index underlying ELS products due to factors such as incomplete sales by financial companies were presented.
On the 11th, the Financial Supervisory Service (Director Lee Bok-hyeon) announced the results of an on-site inspection of 11 major sellers since January 8th in relation to large-scale losses in ELS products underlying the Hong Kong H Index.
The Financial Supervisory Service announced that, as a result of the inspection, ▲ poor sales policy and consumer protection management ▲ incomplete sales at the sales system level ▲ various incomplete sales in the individual sales process were confirmed. We plan to take strict action against illegal acts in accordance with relevant laws and procedures, but take into account the seller’s subsequent efforts to resolve damages, such as compensation for customer damage.
In addition, the Financial Supervisory Service plans to quickly proceed with the investor compensation process by presenting a dispute resolution standard (draft) based on the contents confirmed as a result of the inspection so that disputes between sellers and investors can be resolved early. However, he added that each seller can voluntarily implement compensation (private settlement).
The compensation ratio presented by the Financial Supervisory Service is basic compensation ratio (20~40%), seller’s weight (3~10%), addition by investor (maximum 45%), deduction by investor ± (maximum △45%), and others (±10%). %) etc.
The Financial Supervisory Service emphasized that the compensation ratio according to the standard was designed in an elaborate and detailed manner to be determined by comprehensively reflecting the responsibility of the seller as revealed by the inspection results and the responsibility of the investor taking into account the characteristics of each investor. In addition, we ask for your active cooperation so that compensation can be smoothly made in accordance with this standard and the social and economic costs resulting from a prolonged legal dispute can be minimized.
ⓒFinancial Supervisory Service
◆Case of misselling of Hong Kong H Index ELS revealed as a result of Financial Supervisory Service inspection
The Financial Supervisory Service said, “As a result of the inspection, sellers found that despite the fact that consumer protection regulations and procedures such as the ‘Financial Consumer Protection Act’ (effective in March 2021) have been significantly strengthened since the last derivative-linked securities (DLF) and private equity fund scandal, these consumer protection devices are not actually sold. “In the process, it was found that it did not operate faithfully according to its intended purpose,” he said.
According to the Financial Supervisory Service, first of all, sales companies raised their sales goals during a period when the volatility of the H index increased and designed performance indicators to increase ELS sales at branches. While encouraging sales across the company, some sales companies were found to have neglected the protection of financial consumers, such as changing risk management standards to raise the sales limit for the product and operating a formal non-deposit product committee.
Despite the occurrence of risk factors such as the increase in stock index volatility in each country due to quantitative easing after the stock price plunge due to COVID-19 in early 2020, and President Trump’s executive order in November 2020 (prohibiting U.S. investors from investing in Chinese companies linked to the Chinese military), It is said that risk management of ELS products tracking the Hong Kong H index was neglected.
In addition, cases where product sales standards were arbitrarily adjusted to enable product sales to customers who were not suitable for investing in risky products were confirmed.
Some sales companies omit essential confirmation items when analyzing investor propensity, and have ‘loss tolerance level of less than 20%’․ It was discovered that the sales system was designed to enable sales to investors who are unsuitable for high-risk, long-term risk products such as ‘short-term investment hope’. In addition, cases of omitting or distorting loss risk scenarios and investment risk rating precautions that must be explained when selling ELS products were also confirmed.
The Financial Supervisory Service also presented various cases of ‘incomplete sales at the branch level’ by sales companies.
According to this, as the sales policy and sales system were designed and operated to prioritize the interests of the seller rather than the customer-first principle, various forms of incomplete sales occurred in the individual sales process of the branch, and investors with a stable tendency were encouraged to raise their investment propensity. Alternatively, elderly investors with hearing loss were asked to respond that they ‘understood’ the product contents.
In addition, cases were discovered where investors who had difficulty visiting branches were filling out and signing investment propensity diagnosis questionnaires and product subscription applications on behalf of investors.
ⓒFinancial Supervisory Service
◆What are the ‘dispute resolution standards (draft)’ for compensation for damages?
To ensure that disputes between sellers and investors can be resolved as early as possible, the Financial Supervisory Service has prepared dispute resolution standards (drafts) based on the information identified during inspections and investigations.
The handling principles, methods, and procedures of large-scale dispute cases such as the DLF and private equity fund incidents are referred to in the past, but the specificity of this ELS loss incident, product characteristics, sales channels, etc. are comprehensively considered to be more precise and detailed than past precedents. The explanation is that it was designed.
According to the Financial Supervisory Service, the compensation ratio according to the standard (draft) is determined by comprehensively reflecting the responsibility of the seller confirmed as a result of the inspection and the responsibility of the investor taking into account the characteristics of each investor.
First, the seller factor (23-50%) is determined by the seller’s violation of sales principles such as the principle of suitability and duty of explanation, as well as the lack of sales policy and consumer protection management system, and the investor factor (±45%) is the seller’s financial vulnerability such as the elderly. The compensation ratio is increased or decreased for each individual investment case depending on the reasons for the seller’s and investor’s negligence, such as negligence in protection, the investor’s past ELS investment experience and understanding of financial products.
Meanwhile, if there are issues that are not considered in the addition or deduction items or there are details that are difficult to generalize, they are reflected as other adjustment factors (±10%p).
The Financial Supervisory Service plans to expedite the dispute mediation process by holding a subcommittee for representative cases in accordance with the dispute mediation standards (draft), and each seller will voluntarily make compensation (private conciliation) in accordance with the dispute mediation standards (draft). He said it would be possible.
In addition, the Financial Supervisory Service plans to take strict action in accordance with relevant laws and procedures for illegal acts confirmed as a result of the inspection. However, we plan to take into account the seller’s subsequent remedial efforts, such as compensation for customer damage and correction of inspection points, in accordance with relevant standards and procedures.
Lee Bok-hyun, the head of the Financial Supervisory Service, said in a statement regarding the announcement of this mediation plan, “On the one hand, this dispute mediation standard (draft) ensures that investors who have suffered unfair losses are sufficiently compensated, but on the other hand, it ensures that investors’ “It was prepared with a heavy heart and careful consideration, focusing on ensuring that the principle of ‘responsibility’ is not undermined,” he emphasized.
In addition, the Financial Supervisory Service said that it requested active cooperation so that compensation can be smoothly made in accordance with the standards (draft) in the future and social and economic costs due to prolonged legal disputes can be minimized.
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2024-03-11 02:32:31
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