Business / Corporate

Financial watchdog considers three-month sales halt at Japan Post units

Kyodo

The financial watchdog is considering imposing a three-month suspension of new sales of insurance products at two subsidiaries of the former state-owned postal services group, sources close to the matter said Saturday.

The suspension would be slapped on Japan Post Insurance Co. and Japan Post Co. over improper sales of insurance products for years.

The Financial Services Agency, which concluded a three-month investigation in mid-December, will announce an administrative penalty for the two units, suspected of violating the insurance business law, on Friday after it receives a report from parent Japan Post Holdings Co. early next week, according to the sources.

The agency will request clarification on operational accountability at all three firms, and it is expected to issue a separate order to the parent company to revise its business practices, as the watchdog believes the group’s corporate governance and management were not working properly.

With Japan Post still in the initial stages of investigating whether all of its approximately 30 million policies complied with holders’ wishes, some government officials have said a three-month suspension on the sales is not tough enough, according to the sources.

But the suspension is expected to deliver a blow to the business performance of the postal group, and Japan Post Holdings’ top executive has said he may resign.

The suspension would also follow one that was self-imposed at the subsidiaries in July.

On Wednesday, Masatsugu Nagato, chief executive of the parent company, said he is considering resigning in the wake of the probe which uncovered more than 12,000 cases of suspected improper sales of insurance products at the subsidiaries in the five years through March 2019.

“Regarding management responsibility, I will announce it at an appropriate time,” Nagato said at a news conference in Tokyo.

A company panel looked at 183,000 suspected cases of improper sales at Japan Post Insurance and Japan Post. As of Dec. 15, it found that of those, 12,836 are suspected of violating a law or in-house rules.

It said violation of the insurance business law was confirmed in 48 cases, while 622 were found to have breached in-house rules.

The conduct involved salespeople promoting contracts even though they were a disadvantage to customers, leaving some temporarily uninsured or charged double for old and new contracts.

The panel said more than 70 percent of the customers subjected to the improper sales were aged 60 or older.

The Internal Affairs and Communications Ministry, which supervises the postal group, is set to issue a separate administrative penalty.

Shigeki Suzuki, vice minister at the ministry, resigned Friday after the ministry decided to suspend him for three months for leaking a draft plan of the penalty it was set to impose on Japan Post.