Fri, Jan 10, 2020 - Page 12 News List

Bank, insurance unit fined for lax internal controls

By Kao Shih-ching  /  Staff reporter

The Financial Supervisory Commission on Tuesday fined Taichung Commercial Bank (台中商銀) and its insurance unit, Taichung Bank Insurance Brokers Co Ltd (台中銀保險經紀人), a total of NT$10.8 million (US$359,904) for lax internal controls.

The insurance company was fined NT$4.8 million after the commission conducted an inspection in 2018 and found that the firm had squandered entertainment fees, ignored client complaints and given bonuses to sales personnel with poor performance.

“Although the insurance company clearly recorded the entertainment expenses, it could not elaborate on who could spend the fees or employees’ expense limits,” Insurance Bureau Deputy Director-General Chang Yu-hui (張玉輝) said.

“In short, it had not established an internal control protocol,” Chang said, adding that insurance companies should have internal controls to govern spending.

Chang declined to disclose how much Taichung Bank Insurance Brokers had spent in entertainment expenses over the past few years.

The insurance company could not explain why it rewarded sales personnel who had not sold any products, Chang said, adding that the practice breached the Insurance Act (保險法) and Regulations Governing Insurance Brokers (保險經紀人管理規則).

The bureau told the firm that it had one month to fix the blunder, he said.

The commission fined the insurer’s parent company, Taichung Commercial Bank, NT$6 million for its failure to detect the unit’s regulatory breaches, Banking Bureau Deputy Director-General Huang Kuang-hsi (黃光熙) said.

“It was strange that the bank could not detect the unit’s breach, even though it inspected the insurer two times per year,” Huang said.

The commission decided to impose a stricter fine on the parent company for failing to supervise and monitor its subsidiary, Huang added.

Some of the bank’s staff privately took care of clients’ money, which was inappropriate, so the bureau has prohibited the bank from applying to set up new branches until it improves its management, Huang said.

Taichung Commercial Bank on Wednesday reported NT$1 billion in revenue for last month, down 17.2 percent from a year earlier, saying that cumulative revenue increased 3 percent year-on-year to NT$12 billion.

The company last month posted pretax profit of NT$561 million, down 1.46 percent from a year earlier, while cumulative pretax profit rose 9.5 percent year-on-year to NT$5.2 billion, the company said.

For the whole of last year, earnings per share were NT$1.16, up 7.41 percent from a year earlier, the company added.

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