No more discrimination at banks

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Welcome folks! I am back with a topic that will surely interest you guys.

Is there any of you who has applied for a loan? I am pretty sure that some of your have. When applying for a loan, you go through a complex application procedure. However, you would feel left out, if your loan was refused due to your personal backgrounds such as level of academic achievement, marital status, place of residence and even your age. While banks have discriminated their customers on the basis of personal information so far, this kind of segregation procedure for loan application will be no longer allowed in Korea.

On 31st of October 2012, Korea Federation of Banks implemented a policy, ‘Model Criterion Prohibiting Discrimination’. The criterion says that banks from now on are not allowed to discriminate their customers based on one’s personal backgrounds.

Accordingly, the Korea Federation of Banks along with other financial institutions will amend their previous guidelines on credit ratings, provisions, terms, and manuals. The amendment will be done by the end of this year and then come into effect. The Korea Federation of Banks also announced that there will be a provision to rectify banks’ practices and to grant a remedy for a customer, in case of continuous discriminatory practices by banks.

However, you should be aware that this amendment is not applicable to all the financial products. This is because some financial products are specifically designed with consideration for a customer’s social stratum and income level.

One from the Federation of Banks said in an interview that, “a new criterion will include remedies for victimized customers, as there have been numerous criticisms on banks’ credit assessment procedures.” He added, “the criterion will deal with not only credit assessment guideline, but also application and extension of loans.”

I guess that many people will be waiting for this new measure, as there have been many loan applications unreasonably rejected by banks’ discriminatory procedures. We can expect that this measure will ease financial burdens of households who are desperately in need of loans. Also, the prohibition against discrimination will be a step towards more advanced financial system in Korea!

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