FSC Korea Issues New Interest Rate Disclosure Measures for Banking Sector

South Korea's FSC (Financial Services Commission) has announced  new measures aimed at improving the interest rate disclosure system in the banking sector.

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In a notice, the FSC said the new measures aim to protect the rights and interests of financial consumers, and help to promote interest rate competition between banks.

The measures will require banks to publicly disclose their lending and deposit rates, as well as their net interest spreads, on the KFB (Korea Federation of Banks) website. This information, which will be updated monthly, will allow consumers to make quick comparisons between banks, the FSC said.

On deposit rates, banks will be required to disclose the average interest rate paid on for each deposit product, to ensure consumers can be informed about the real interest rates that are being applied to them.

On lending rates, banks will be required to disclose loan interest rate information based on a universal standard for credit scores. Currently, banks used their own credit grading systems, which causes confusion among borrowers.

The FSC also said it will overhaul the rate calculation system to ensure that rate calculations are conducted in a "reasonable and transparent" way and underpinned by more robust self-inspection and internal control processes.

The regulator also intends to check for market variations in the rates paid on deposits at least once every month, and work to have such variations reflected in banks' base rates.

The FSC has also unveiled plans to pilot the introduction of intermediary business for online deposit products. This will enable consumers to "easily make comparisons on savings and deposit products offered by multiple financial companies," the regulator said.

The regulator will also seek to strengthen requirements for banks to explain personal credit assessments to consumers and notify them of their right to make an appeal.

The improvements to the interest rate disclosure system will be implemented as early as this month. Changes to the rate calculation system and to strengthen the rights and interests of consumers will also be carried out "promptly", the regulator said.