"Financial Services Commission Allowing Illegal Bank Appraisals"... Official Protest by Appraisers Association

"Agreement Reached" at the National Assembly,
But Issue Left Unaddressed

Appraisers Association Officially Protests "Breach of Principles"

The Korea Association of Real Estate Appraisers has officially lodged a protest with the Financial Services Commission for allowing banks to continue their illegal in-house appraisal activities.

On July 15, the association announced that it had sent an official letter to the Financial Services Commission, demanding corrective measures for the banks' illegal in-house appraisals and requesting a written reply. This action comes nine months after the association and the Financial Services Commission agreed, in October of last year, to improve the banks' internal collateral valuation methods, as intended by the Appraisal Act.

Financial Services Commission nameplate. Korea Association of Real Estate Appraisers

Previously, on October 22 of last year, the association had reached an agreement on the 'Principles for Improving Banks' Internal Collateral Valuation Methods' with the Vice Chairman of the Financial Services Commission, and submitted a written document to the National Assembly. During the National Assembly's Political Affairs Committee audit on October 27, Financial Services Commission Chairman Lee Eogwon responded to Democratic Party lawmaker Kim Yongman’s criticism that 'the issue of banks' in-house appraisals has been repeatedly pointed out at National Assembly audits since 2022, but the Financial Services Commission has continued to delay addressing it by citing the task force,' stating, 'The Vice Chairman of the Financial Services Commission and the head of the Association of Real Estate Appraisers recently met and agreed in principle to improve the valuation methods.'

Subsequently, the association, the Financial Services Commission, the four major commercial banks, and the Korea Federation of Banks held two joint meetings and continued discussions until February this year. However, since the end of the meetings, the Financial Services Commission has not taken any follow-up actions, such as administrative guidance, to prepare improvement measures.

Current laws related to real estate appraisal stipulate that when financial institutions seek property appraisals for lending or other purposes, they must commission independent outside appraisal firms. The Ministry of Land, Infrastructure and Transport, which oversees the Appraisal Act, also issued an authoritative interpretation in September last year, declaring it illegal for banks to directly employ appraisers and conduct in-house collateral valuations.

The association claims that, rather than calling for a complete halt to illegal activities, the Financial Services Commission is effectively condoning the violations by proposing a mediation plan that merely reduces the extent of in-house appraisals. The mediation plan put forward by the Financial Services Commission would cut banks' use of in-house appraisers to about half by 2030.

Through the official letter, the association also demanded that the Financial Services Commission clarify the reasons it has taken no administrative action to rectify illegal practices, and to clarify whether it has investigated the current status of in-house appraisals by commercial banks.

An association representative stated, "We cannot accept any compromise that tolerates illegal practices contrary to the government's authoritative interpretation. The Financial Services Commission must not evade responsibility for resolving this problem and must eliminate unlawful practices in accordance with the law."

This content was produced with the assistance of AI translation services.