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The antitrust watchdog launched a probe into banks and credit card companies for possible manipulation in their service charges, industry sources confirmed Sunday, intensifying its push to slash fees further.
The Fair Trade Commission is said to have launched their investigation into 17 local banks and more than 13 credit card firms to see if they conspired to fix prices to ease competition. Charged guilty, the case be a major blow to their balance sheet where the fines could add up to several hundred billion won. Areas subject to investigation include credit card applications, loans, money transfers, deposits and withdrawals where fees applied are similar across companies.
“Even if companies didn’t physically gather to fix prices, they can be charged guilty from sharing information related to their service charges,” an industry watcher said
The FTC denied all news reports about the fresh investigation into the two industries.
The probe comes as a further push on credit card companies and banks whose industry groups have already agreed to cut fees on growing calls to share their shaky profits.
Major credit card companies including Shinhan Card, Lotte, BC, Hyundai and Hana SK in October agreed to lower the transaction fee from around 2 percent to 1.6-1.8 percent for small businesses.
Chief executives of the major four banks followed the suit in less than a week, agreeing to slash services fees on customer transaction. They haven’t lowered fees yet. Decisions to cut fees came after the Lee Myung-bak administration staged its “shared growth” campaign with key government agencies and regulatory bodies. The financial industry has been subject to a particularly intense probe after a persistent public outcry against their hefty profits despite the financial recession in the past few years.
Nine banks currently charge the same amount of withdrawal fee for using cash machines, 600 won. Major credit card companies equally charge 1.5 percent of service fee on gas stations and hospitals. Credit card companies denied all such charges, saying “there has been no price fixing conspiracy,” a manager at a local credit card firm said.
By Cynthia J. Kim (cynthiak@heraldcorp.com)
The Fair Trade Commission is said to have launched their investigation into 17 local banks and more than 13 credit card firms to see if they conspired to fix prices to ease competition. Charged guilty, the case be a major blow to their balance sheet where the fines could add up to several hundred billion won. Areas subject to investigation include credit card applications, loans, money transfers, deposits and withdrawals where fees applied are similar across companies.
“Even if companies didn’t physically gather to fix prices, they can be charged guilty from sharing information related to their service charges,” an industry watcher said
The FTC denied all news reports about the fresh investigation into the two industries.
The probe comes as a further push on credit card companies and banks whose industry groups have already agreed to cut fees on growing calls to share their shaky profits.
Major credit card companies including Shinhan Card, Lotte, BC, Hyundai and Hana SK in October agreed to lower the transaction fee from around 2 percent to 1.6-1.8 percent for small businesses.
Chief executives of the major four banks followed the suit in less than a week, agreeing to slash services fees on customer transaction. They haven’t lowered fees yet. Decisions to cut fees came after the Lee Myung-bak administration staged its “shared growth” campaign with key government agencies and regulatory bodies. The financial industry has been subject to a particularly intense probe after a persistent public outcry against their hefty profits despite the financial recession in the past few years.
Nine banks currently charge the same amount of withdrawal fee for using cash machines, 600 won. Major credit card companies equally charge 1.5 percent of service fee on gas stations and hospitals. Credit card companies denied all such charges, saying “there has been no price fixing conspiracy,” a manager at a local credit card firm said.
By Cynthia J. Kim (cynthiak@heraldcorp.com)
