A financial consumer advocate on Friday criticized financial authorities for glossing over some commercial banks’ alleged rigging of interest rates.
“Regulators such as the Financial Services Commission and the Financial Supervisory Service are neglecting their duties,” said a spokeswoman for the Korea Consumer Agency.
Her remarks came after the special board, which comprises regulatory officials and lawyers, earlier in the day rejected some 200 borrowers’ call, led by KCA, for the FSS to launch a probe into the allegation.
She alleged that the board decided to reject the petition without conducting a sufficient preliminary review.
“We will continue to ask antitrust regulators as well as the financial regulators to investigate the rate-fabrication and cartel allegations in the banking sector.”
In its earlier statement, KCA alleged that banks overcharged borrowers collectively about 4.1 trillion won ($3.5 billion) in interest from January 2010 to June 2012 by fabricating rates for certificates of deposit.
“This means the nation’s bank customers had to shoulder the extra loan interest burden worth 136 billion won a month on average,” said KCA.
The civic action comes amid the ongoing antitrust probe from the Fair Trade Commission into the allegations that some banks rigged the CD and loan rates via cartel practices.
Aside from the banking sector case, some market insiders said that the prosecution may launch investigations into similar allegations in the brokerage industry in the coming months.
In late 2012, the antitrust regulator referred six securities firms to the prosecution on allegations that major securities brokerage firms colluded to fix the rates on CDs.
“The antitrust regulator FTC has been more active in looking into the CD cartel allegation in the financial sector, compared to the financial regulator FSS,” said an executive director in the securities sector.
Citing the “obvious evidence of dealers’ talks on mobile messenger services” that were secured by the FTC, he said it does not seem that the six securities firms will be able to avert prosecutors’ investigation.
He also predicted that more brokerage firms or some banks would possibly be placed under the additional investigative target of the FTC and prosecution.
