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ELT is a financial product that delivers its promised rate of return when the stock price index or individual stock prices meet a pre-set target.
Market observers say ELTs yield returns of about 10 percent annually compared to less than 4 percent for time bank deposits.
The Financial Supervisory Service dispatched its staff as so-called “mystery shoppers” at 300 branches.
The undercover inspection ended in December 2012 and gauged consumer satisfaction with the products by evaluating banks in 20 categories, including whether they provided guide material to investors, offered products that suit individual customer needs, and fully explained risks and how much customers could lose.
Mystery shoppers graded the banks’ performances as excellent, good, average, below average or poor. They said banks received an average score of 69.6 points of a maximum of 100.
Korea Exchange Bank received the highest grade of excellent by scoring more than 90 points, followed by Shinhan Bank and Hana Bank rated “good” and Standard Chartered Bank Korea rated “average.”
KB Kookmin Bank and Citibank got the worst grades of 59 points or lower.
The Financial Supervisory Service said banks were good at explaining basic elements of the financial product, including early redemption of investments, but they were particularly weak in suggesting investments based on various financial markets performance scenarios and financial products suitable to the needs of individual consumers.
“Banks that received ‘below average’ or ‘poor’ grades will be required to submit their plans to improve their sales practices to the watchdog and we will monitor whether they have faithfully put their improvement plans into action in the future,” said Kim Gwang-wook, an official at the FSS.
By Kim Mi-ju [mijukim@joongang.co.kr]
