The Financial Services Agency ordered two subsidiaries of the former state-owned postal services group to suspend new sales of insurance products on Friday, for three months, over improper sales that left thousands of people disadvantaged.
The FSA issued the penalties to the two units of Japan Post Holdings Co., which was privatized in 2007 and is owned 57 percent by the government, after concluding a three-month investigation in mid-December.
To take responsibility, Masatsugu Nagato, CEO of Japan Post Holdings, and Mitsuhiko Uehira and Kunio Yokoyama, presidents of the units Japan Post Insurance Co. and Japan Post Co., respectively, announced their resignations, effective Jan. 5, later in the day.
The Ministry of Internal Affairs and Communications, which supervises the postal group, also said it had issued business improvement orders to both the parent company and Japan Post, which sells the insurance policies.
Hiroya Masuda, a former minister of internal affairs and communications, will replace Nagato from Jan. 6, to take on the task of enhancing corporate governance and profitability, the postal group confirmed at a news conference Friday evening.
Tetsuya Senda, deputy president of the insurance unit, would succeed Uehira, while Kazuhide Kinugawa, a senior managing executive officer at the parent company, would replace Yokoyama, effective the same day, the group also confirmed.
An internal probe by Japan Post uncovered 12,836 suspected breaches of law or in-house rules as of Dec. 15, with 670 of those cases confirmed. The scandal sent shock waves through the public, especially in rural areas where people generally have trust in the financial and mail delivery services offered at the more than 20,000 post offices across the country. The investigation, taking into account all 183,000 suspected cases of improper sales at Japan Post, is ongoing.
The misconduct involved salespeople encouraging customers to sign contracts even though those customers were disadvantaged by them, leaving some temporarily uninsured or charged double for old and new contracts. The probe that found more than 70 percent of the customers subjected to improper sales were age 60 or above. It also showed the salespeople were motivated to sell the products improperly to achieve sales quotas and earn additional bonuses, or to “prevent causing worry to their bosses.”
Employees at Japan Post also told the investigation that some salespeople were harassed in front of their colleagues for failing to achieve sales quotas.
LATEST BUSINESS STORIES
Click to enlarge
