Interest Rate Disclosure System to be Improved for Protection of Consumer Rights and InterestsJul 06, 2022

The FSC unveiled a set of measures to make improvements to the interest rate disclosure system in the banking sector on July 6. The measures are aimed at protecting the rights and interests of financial consumers and include the following.


a) Making improvements to the disclosure of net interest spread (NIS) comparisons and on the disclosure of lending and deposit rates to make accurate and adequate information about interest rates available to consumers.

b) Overhauling the rate calculation system to ensure that rate calculation is conducted in a reasonable and transparent way and bolstering the banking sector’s self-inspection and internal control on rate calculation.

c) Piloting online deposit products intermediary business, strengthening the requirement to explain personal credit assessment to consumers and having banks to disclose their performance on meeting consumers’ demand for interest rate reduction in order to promote interest rate competition between banks.




With the normalization in monetary policy taking place across the globe and the Bank of Korea’s base rate increase, rapidly rising market rates have pushed up lending rates and deposit rates in the banking sector. In particular, due to a considerable hike in lending rates to households, banks’ net interest spread (NIS) for the household sector has expanded and consumers are experiencing added burdens as a result.


As there are possibilities of growing financial cost burdens on consumers in times of rate hikes, the authorities plan to seek following measures for improvement to expand interest rate disclosures and ensure rate calculation in a reasonable way.

Key Details for Improvement


I. Improving Interest Rate Disclosures to Bolster Information Accessibility for Financial Consumers


a) Net interest spreads (NIS) of all banks will be disclosed in a comparative format (on the website of Korea Federation of Banks) and the disclosure cycle will be shortened from three months currently to one month. Since the aim is to disclose monthly variations, calculations will be based on new loans and deposits. To make it easier for consumers to understand, the average NIS for both household and corporate sectors as well as the household-only NIS (by credit score range) will be disclosed alongside.

b) To help consumers easily identify relevant information on interest rates suitable for their credit scores, the disclosure criteria for lending rates will be changed from the banks’ own grading system currently in practice to the credit scores provided by credit bureaus (CBs). Considering that there is a relatively high proportion of individuals with high credit scores compared to other sectors, disclosures will be made available in 50-point ranges (9 ranges in total).

c) With regard to the deposit rate, in order to help consumers verify information on the real interest rates being applied to them, additional disclosures will be made on the previous month’s average interest rate (new deposits) for each deposit product.


II. Overhauling the Rate Calculation System to Improve Its Reasonableness and Transparency


a) With regard to the lending rate, while guaranteeing the autonomy of banks for calculating rates, improvements will be made rooted on basic principles to ensure that calculation of lending rates is carried out according to a reasonable process and ground.

b) With regard to the deposit rate, authorities plan to check variations in market rates at least once every month and work to have these variations in market rates reflected in banks’ base rates.

c) Banking sector’s self-inspection and internal control for rate calculation will be strengthened. Banks will carry out self-inspection on their rate calculation system twice every year through their own internal control department, which will then be used as a reference during regular inspections performed by the Financial Supervisory Service.


III. Promoting Interest Rate Competition between Banks and Strengthening the Rights and Interests of Consumers


a) Online deposits products intermediary business will be piloted to allow consumers to easily make comparisons on savings and deposit products offered by multiple financial companies through an online platform. Considering some of the risk factors along with the advantages to consumers, authorities will review whether to impose certain conditions when deciding to designate it as an “innovative financial service” under the regulatory sandbox program.

b) Banks will provide explanation and information on the rights of consumers in advance so as to help consumers to actively exercise their right to demand explanation on their personal credit assessment and the right to make an appeal.

c) Banks will disclose every six months (on the website of Korea Federation of Banks) their performance on meeting consumers’ demand for interest rate reduction while consumer notification will be strengthened.


Further Plan


Authorities will promptly carry out the measures to expand the accessibility of interest rate data for consumers and promote interest rate competition in the banking sector. With regard to the measures to improve the interest rate disclosure system, the process for building a necessary system will take place immediately to ensure disclosure of interest rates from July this year. Other tasks such as overhauling the rate calculation system and strengthening the consumers’ rights and interests will also be carried out promptly.

* Please refer to the attached PDF for details.