韩国FSC年内多次下调FSS拟处罚金额，监管可信度受质疑但缺乏可交易增量

South Korea's Financial Services Commission has repeatedly lowered penalties below the levels proposed by the Financial Supervisory Service, prompting analysts to question whether the original sanctions were excessive and drawing criticism from the National Assembly Research Service over weakening confidence in financial regulators.
Of the monetary penalties against financial institutions approved at FSC regular meetings from January through July 1, 38 cases were changed from the FSS's original proposals, according to financial industry sources on the 2nd. Of those 38 cases, 34, or 89.5%, involved reduced amounts, while four were revised upward.
Toss Bank is a prominent example. On July 1, the FSC cut the fine on Toss Bank to 214 million won from the 1.214 billion won proposed by the FSS. The FSS had determined that pressuring customers into signing up for deposit products violated the ban on coercive practices under the financial consumer protection law. The FSC, however, concluded it was difficult to find coercion against customers' will, given that internet-only banks conduct most transactions without face-to-face contact.
In June, a penalty against Hana Bank was reduced to 63 million won from 312 million won. The FSS had calculated the fine on the grounds that Hana Bank violated its obligation to refrain from unsound business practices, but the FSC cut it to one-fifth of that level in consideration of fairness with similar cases. In January, fines and penalty surcharges against 13 large securities firms were sharply reduced or waived. The decision was based on an FSC no-action letter treating March through September 2021, the early months of the financial consumer protection law, as a guidance period during which supervision would focus on education rather than punishment.
The concern is that repeated reductions of FSS penalty proposals could undermine the predictability of sanctions and overall trust in regulators. On the 27th, the National Assembly Research Service criticized the handling of penalty surcharges over the mis-selling of equity-linked securities tied to Hong Kong indexes, saying that "the penalty surcharges on five banks plunged at each stage from an initial 4 trillion won to 600 billion won" and that "concerns are being raised that sanctions lack consistency and are swayed by public opinion." It added that "this is the first time the FSC has sent an FSS penalty proposal back, and if the reason is excessive internal opinions and a string of court losses, that amounts to saying that fear of losing and public opinion, not law and evidence, decided the sanctions."
Inside and outside financial regulators, many say a recent series of administrative court defeats is influencing the review process. Regulators lost the first trial in a suit filed by Dunamu seeking to overturn a three-month partial suspension of operations, and in April they also lost a suit seeking to cancel the suspension from duty imposed on former KB Securities President Park Jung-lim, who received heavy disciplinary action over the Lime fund scandal. With disciplinary decisions overturned one after another in court, penalty surcharges refunded to financial firms exceeded 3.5 billion won as of the end of May, more than four times last year's total of 789 million won.
Concerns have also surfaced within the FSC that the possibility of administrative litigation should be weighed during penalty reviews. At a regular meeting on April 29, one FSC commissioner said, "If we impose the sanction as it stands, an administrative suit could be filed and become a problem," while reviewing a proposal to cut a penalty surcharge against Chungwoon Credit Union to 42 million won from 530 million won.