The Financial Services Commission has finalized a penalty of approximately 7 billion won against Dongyang Life for violating the Credit Information Act. This amount is one-twentieth of the 140 billion won penalty calculated during the Financial Supervisory Service's (FSS) disciplinary review. The reduction reflects a reassessment of the nature of the information provided, the purpose, and the extent of the violation, raising questions about its potential impact on penalties for Shinhan Life and Lina Life, which are also undergoing similar disciplinary procedures.
According to the financial sector on September 9, the Financial Services Commission approved the penalty during its regular meeting.
In 2022, Dongyang Life was found to have provided personal credit information to its subsidiary, a corporate insurance agency (GA), without customer consent. The FSS deemed this an unauthorized third-party provision under the Credit Information Act and initially calculated a penalty of around 140 billion won.
During the penalty calculation process, the Financial Services Commission considered that the information was provided to a subsidiary GA responsible for insurance solicitation, contract maintenance, and customer management, rather than to a general external entity. This distinction led to adjustments in the penalty range and reduction levels, as the provision of information to a subsidiary differs from typical third-party disclosures and has some characteristics of business delegation.
The final decision took over three years to reach. Following the FSS's disciplinary review, the Financial Services Commission's Legal Interpretation Review Committee and the Agenda Review Subcommittee repeatedly examined the legal nature of the information provision and the level of penalties. Discrepancies in the assessment of the violation and penalty calculation between the FSS and the Financial Services Commission resulted in a significant reduction from 140 billion won to 7 billion won.
The initial calculation of the penalty at 140 billion won was influenced by the penalty structure outlined in the Credit Information Act, which allows for penalties of up to 3% of related revenue for unauthorized third-party disclosures of personal credit information. Applying this 3% to Dongyang Life's revenue would yield a penalty of approximately 140 billion won.
Critics in the insurance industry have argued that this calculation method does not adequately reflect the purpose of the information provision, intent, and actual consumer harm. They contend that treating the act of providing customer information to an unspecified external entity the same as providing it to a subsidiary responsible for insurance solicitation is excessive.
This decision is expected to serve as a benchmark for Shinhan Life and Lina Life, which are also facing penalties for similar issues involving the provision of customer information to their subsidiary GAs. The statutory maximum penalty, based on a simple application of 3% of revenue, would amount to approximately 209.6 billion won for Shinhan Life and about 96.2 billion won for Lina Life, totaling over 300 billion won for both companies.
If the Financial Services Commission applies the rationale for the nature of information provision and reduction logic used in Dongyang Life's case to subsequent penalties, the actual penalties for these two companies may also be significantly lower than initially expected. However, given the differences in the methods, duration, number of customers involved, and extent of violations, it remains uncertain whether they will receive the same level of reduction as Dongyang Life.
In light of this case, financial authorities are also considering revising the penalty criteria under the Credit Information Act to more accurately reflect the nature of violations, intent, and the scale of consumer harm.
* This article has been translated by AI.
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