The Bank of Thailand is escalating the punishment for banks that violate the regulator’s market conduct rules.
Veerathai: Penalty of up to B1m a day
Institutions that fail to conform to the central bank’s guidelines will be barred from operating the transgressing business and will be subject to fines of up to 1 million baht per day, among other penalties.
The new penalty scheme will be implemented over the next few weeks. The measure is part of the central bank’s comprehensive regulations governing market conduct and will include fines and public disclosure requirements for violators, said Bank of Thailand governor Veerathai Santiprbhob.
The maximum fine rate is set at 1 million baht a day. Additional charges may be levied on a case-by-case basis. The move is part of the Bank of Thailand’s efforts to revamp market conduct rules and strengthen consumer protection.
The improved rules cover deposits, debit cards, credit cards, personal loans, mortgages and leasing, as well as financial products sold through bank channels.
The central bank formed its Financial Consumer Protection and Market Conduct Department last October to improve fairness in the financial industry and protect consumers. The department adopted a three-pronged approach to address the issues.
The department plans to create awareness among financial institutions on good market conduct; issue holistic, clear and easy-to-enforce regulations; and improve public understanding of financial products and consumer rights.
Separately, Ruchukorn Siriyodhin, the deputy governor in charge of overseeing financial institution stability, said consumers’ complaints about bancassurance products declined after the central bank checked the service through “mystery shopping” measures last year.
As banks improved services and sales, consumer complaints significantly dropped from the second half of last year. On average, there were 21 consumers complaints in the first quarter of last year, compared with 27 cases in the second quarter. There were only 16 cases in the third quarter and nine cases in the fourth.
Assistant governor Ronadol Numnonda said the central bank implemented banking product comparisons on its website starting from Tuesday, offering consumers a convenient overview of financial products.
In the initial stage, the comparison is limited to deposit products, but will expand to all financial products by the middle of the year.
The central bank is running an investigation of the seven banks where deposit accounts were opened with the ID of Nicha Kiartthanapaiboon, who was jailed for three days. The accounts were opened even after banks reported the incidents to the Bank of Thailand. Banks found guilty of misconduct will be punished accordingly.
Speaking about cryptocurrencies, Mr Veerathai said the Anti-Money Laundering Office is processing a legal amendment that will make digital currencies illegal in order to prevent them from being used as a tool for money laundering.
The central bank wants investors to understand that cryptocurrency is not money, but a virtual asset or virtual commodity. It is high-risk asset because its value is not based on any fundamentals.
“Some investors don’t understand that its high value is a result of low supply, but there are new crypto-currencies entering the market weekly,” Mr Veerathai said. “Cybersecurity is another digital currency risk.”
Cryptocurrency cannot impact the country’s financial stability because there are no banks involved at the moment. Although there are some individual players, there are no active users.
The Bank of Thailand has also had discussions with parties monitoring the digital currency.
In the meantime, Finance Minister Apisak Tantivorawong said several countries consider bitcoin as a channel for money-laundering activities, as there is no disclosure of the digital currency’s holders.