Anti-Scam Staff Wages Counted as “Social Contribution”: FSS Calls on Bank Boards to Scrutinize Results
If a bank presents the wages it pays staff to stop fraudsters taking customers' money as a social contribution, customers are being asked to applaud its basic work as a good deed. In materials for an October 28 meeting with the chairs of bank holding companies, the Financial Supervisory Service (FSS) cited such costs as an example of social contribution for show. It also named sponsorship of local-government events aimed at winning municipal banking contracts and spending on events to attract new customers. That is why readers should first examine what banks count as a contribution, rather than simply how much they say they spent. FSS meeting materials, p. 3
The banking sector's social-contribution total exceeded 2 trillion won for the first time in the previous year's results announced this year. Yonhap's May report on the Korea Federation of Banks' figures put the total at 2.156 trillion won. The FSS also acknowledged progress in banks' fulfillment of their social responsibilities at this meeting. At the same time, it called on boards to establish medium- and long-term plans and examine actual results. Directors are being asked to check whether announced spending translates into help for the people who need it. Yonhap's coverage of the Korea Federation of Banks report, FSS materials, p. 3
EEJE compared two passages in the announcement dealing with customer protection. On page 2, the FSS described information security as a core financial-company function that protects customers' assets and information. It urged boards to take an active role rather than viewing security investment merely as a cost. On page 3, it criticized the presentation of wages for call-center staff responding to telephone scams as a social contribution. Read together, these passages call for a distinction between what a bank must do to conduct its business and what it contributes to society beyond that work. FSS original materials, pp. 2–3
At the same meeting, the FSS asked boards to consider access for older people and other financially vulnerable customers when making decisions about branches. Banks calculate a branch's income and costs, but customers go there to withdraw money and ask staff how to carry out transactions. For customers unfamiliar with digital banking in particular, access to a staff member and a service counter can determine whether they can use financial services at all. When boards assess social contribution, their business judgments must also consider whether customers can actually use the bank. FSS materials, p. 3
FSS Governor Lee Chan-jin called on directors to go beyond rubber-stamping management proposals, actively request information and draw on outside experts. EBN covered the meeting primarily through its demands for substantive board deliberation and proper CEO succession procedures. Social contribution is another business judgment directors must scrutinize. To get beyond numbers prepared for announcements, they need to ask whether operating expenses have been included, whether support plans have been carried out and whether customers have benefited. FSS materials, p. 3, EBN's report on the meeting
EEJE Editorial Analysis: Banks explaining their social contribution should show what lasting help recipients received. Mixing in the cost of securing municipal banking contracts and the wages needed to protect customers makes those results difficult to judge. Boards should demand an itemized account of spending purposes and outcomes for beneficiaries, and disclose basic business functions separately from additional support. A bank should have someone to answer when a customer faces a scam, and a counter where people can get help with difficult transactions. Banks should fulfill those everyday responsibilities while speaking of their contribution to society.