The Korea Appraisers Association said Wednesday it sent a formal letter to the Financial Services Commission on Tuesday, requesting corrective action and a written response regarding banks' illegal in-house appraisal practices. The association contends the FSC has taken no action against the illegal self-assessments.

Earlier, the association reached an agreement with the FSC vice chairman on Oct. 22 last year on principles for improving banks' in-house collateral valuation methods, and submitted the agreement to the National Assembly in writing. At a national audit of the Assembly's Political Affairs Committee on Oct. 27 of the same year, the FSC chairman said a principled agreement had been reached on the valuation method and that a formal accord would be drawn up within that framework.

"Since then, the association has held two joint meetings with the FSC, the four major commercial banks and the Korea Federation of Banks, with discussions continuing through February this year — yet the FSC has not taken a single step toward developing an improvement plan," the association said.

The Ministry of Land, Infrastructure and Transport issued an authoritative interpretation last September that appraisals of loan collateral conducted by bank-affiliated appraisers violate Article 5, Paragraph 2 of the Appraisal and Real Estate Agents Act. During the discussions, the FSC proposed a mediation plan that would reduce — rather than halt — the banks' illegal in-house appraisals.

The association said the FSC's proposal "directly contradicts the authoritative interpretation issued by the Ministry of Land, Infrastructure and Transport, the ministry with jurisdiction over the Appraisal Act," adding that the regulator was "in effect evading a resolution by putting forward a mediation plan that cannot be agreed upon." It called the move "ultimately a breach of the agreed principles between the association and the FSC."

In response, the association said it formally asked the FSC to explain in writing its clear position and future plans for resolving the banks' illegal in-house appraisal practices, as well as the reasons no measures have been taken to date to address the violations.


hwshin@heraldcorp.com