Issuing Credit Cards to 1.84 Million Non-income Earners

It has turned out that credit card companies had issued some 4.31 million cards to 1.84 million people who were exempted from national pension insurance premium due to low profits.

Nineteen credit card companies, including Kookmin Card, were discovered to have issued cards to 189 people who died between 2000 and 2001 and to 451 people who died after requesting for an issue. However, they did not receive any specific type of sanctions, showing that the government’s supervisory administration over the card market was badly out of shape.

The Board of Audit and Inspection (BAI) announced the results of the special investigation into the credit card sector including these details on July 16, and said, “Those with four or more credit cards around the end of 2002 amounted to 10.23 million, with 1.07 million repaying card debts in turn through cash advances. “

On the matter of reorganizing the supervision system, BAI advised that the Financial Supervisory Service’s enactive and amending power for financial supervision regulations, authorization power over establishing and shutting down financial institutions, authorization power relating to management over financial institutions and the right to inspect into unfair transaction, and administering the market to be transferred to the superior Financial Supervisory Commission.

Relating to this, BAI said, “At the time of January 2000, Lee Hun-jai, chairman of both the Financial Supervisory Service (FSS) and Financial Supervisory Commission (FSC), took to both sides of the parties by himself and contracted a MOU (Memorandum of Understanding) on dividing financial supervisory duties. His deputing the authorization power over establishing and shutting down financial institutions to the private FSS even has unconstitutional intentions,” and asked for this matter to be rectified.

As for short-term measures, BAI advised that FSS concentrate only on inspecting financial institutions and consumer protection and that the chairman position for FSS and FSC be separated to FSC Chairman Lee Jung-jae.

As for the long-run, the Ministry of Finance-Economy’s financial policy bureau, FSS and FSC, should be made into a singular governmental department, and the details for this measure was turned in to the Presidential Committee on Government Innovation and Decentralization.

Meanwhile, the Finance-Economy Ministry, FSS and FSC were reprimanded for this matter. BAI had only requested personnel sanction for FSS’s vice-chairman, Kim Joong-hoe, bringing out criticism for not placing responsibility on high-ranking officials at the Ministry of Finance-Economy and FSC.

Young-Hae Choi yhchoi65@donga.com