The Financial Supervisory Service has launched a regular inspection of KB Financial Group and Kookmin Bank. The regulator plans to conduct a broad review of overall management, including governance, internal controls and loan management, with an emphasis on financial consumer protection.
The FSS began the regular inspection of KB Financial Group and Kookmin Bank on the 7th, according to financial industry sources. Given that the Chuseok holiday falls within the inspection period, on-site checks are expected to continue until mid- to late October.
Starting this year, a separate inspection team has been formed for financial consumer protection. The team will examine the entire process of financial products from design and review to sales and post-sale management, and will focus on whether the company complies with related rules such as the Financial Consumer Protection Act and the Individual Debtor Protection Act. The inspection is also said to cover whether the firms have implemented best practices in governance, including the independence of the board and the fairness and transparency of procedures for selecting a chief executive officer.
Overall management areas such as lending, internal controls and information security are also expected to be reviewed. The FSS is likely to examine whether internal control procedures functioned properly in the design and sale of high-risk financial products, and whether loan screening and approval procedures are being operated appropriately to prevent improper lending.
It is the first regular inspection of KB Financial Group and Kookmin Bank by the FSS in two years, since August 2024. That inspection focused on reviewing how internal controls were operating, prompted by massive losses on equity-linked securities tied to Hong Kong's Hang Seng China Enterprises Index and a series of financial incidents. It also uncovered signs that Kookmin Bank had provided about 700 billion won in indirect support to KB Bank, its Indonesian subsidiary formerly known as Bank Bukopin, to improve the unit's soundness indicators.
