The Financial Supervisory Service is set to conduct inquiries into five credit card companies to monitor their cyber security measures against possible leaks of customer information.

The firms are BC Card, Shinhan Card, Hyundai Card, KB Kookmin Card, Lotte Card.

BC Card has been scheduled to be under yearly regulatory probe and the remaining four issuers will be subject to extraordinary scrutiny in the wake of the frequent financial accidents in the credit card sector.

The FSS has already completed its full-fledged probe into Samsung Card and Hana SK Card.

Samsung and Hana SK, which suffered a number of customer information leaks during the third quarter, have faced regulatory sanctions.

The FSS also has pledged to conduct a more intensive inquiry into the overall financial industry.

The watchdog has instructed financial companies to bolster cyber security for their electronic financing system to check for critical weakness.

Electronic finance in the nation has made rapid progress over the past several years.

However, financial security breaches have continued, such as hacking at Korea Exchange Bank in May 2005, phishing at Kookmin Bank and Nonghyup in January 2007, an attempt to hack into Hana Bank and Korea Exchange Bank in May 2008, hacking at Moa Savings Bank in May 2008, and a series of financial accidents by telephone.

“As the risk of electronic financial accidents has increased, continued efforts should be made to further develop e-finance safety,” an FSS official said.

The Electronic Financial Services Act was enacted in February 2006 and came into effect in January 2007. Its purpose is to decide who takes responsibility for financial accidents and to protect customers.

Solving the responsibility problem may be necessary to decide possible solutions between customers and financial companies.

The act states that financial companies and e-finance service providers should take responsibility for damages when customers sustain losses resulting from breaches.

Meanwhile, the FSS is moving to reprimand chief executives of major credit card companies for irregular business practices.

While the FSS is considering handing down sanctions on several companies for irregularities including reckless issuance of credit cards, the regulator also plans to penalize their CEOs under its earlier commitment.

The regulatory stance reportedly came in the second quarter from Kim Seok-dong, chairman of the Financial Services Commission, the decision-making panel of the FSS.

In late May, top regulator Kim instructed his staff to take tough disciplinary action against CEOs to curb excessive competition in the local credit card market, a regulatory official said.

By Kim Yon-se (kys@heraldcorp.com)