FSA Penalizes MUFG Units For Client Data Issues In Japan

Japan’s Financial Services Agency (FSA) has ordered three units of Japan’s biggest banking group, Mitsubishi UFJ Financial Group (MUFG), to improve their business. The regulator took this initiative because the units broke the rules about keeping clients’ information secret.

FSA Has Ordered Three MUFG Units To Improve Their Operations

The Financial Services Agency told Morgan Stanley MUFG Securities Co., MUFG Bank Ltd., and Mitsubishi UFJ Morgan Stanley Securities Co. to enhance their operations. The FSA also required reports by July 24 about why the rules were broken and the next step to take to prevent such incidents again.

According to the update, the scandal has depreciated the confidence in the country’s biggest banking group, making some customers go to other banks for bond underwriting. Japan doesn’t allow the same financial group’s banking and investment parts to share customer information without permission. This helps prevent banks from using their power unfairly.

The Finance Minister in Japan, Shunichi Suzuki, said Mitsubishi won’t take the matter lightly and will take vital steps to improve its business. He noted that the group has to improve its management control system and other essential business settings to ensure the current situation does not repeat itself.

The FSA’s investigative team, the Securities and Exchange Surveillance Commission, reported earlier this month that the three MUFG units wrongly shared client information at least 26 times to get more business. The market watchdog also discovered other inappropriate behavior, such as instances where MUFG Bank attempted to secure underwriting business for the brokerage unit.

In one instance, a director of MUFG Bank knew that sharing information might be wrong, as stated by Japan’s Financial Services Agency report. According to sources familiar with the situation, the person in question was Kanetsugu Mike. When asked, a spokesperson from MUFG declined to discuss Mike.

MUFG Agrees To FSA’s Improvement Order And Promises To Take Necessary Actions

One Japan’s Financial Services Agency official said the group didn’t misuse its power. However, sharing clients’ details without consent was a serious issue. The official also said MUFG is responsible for managing the whole organization and is working on improving its system.

MUFG said it took the order to improve its business very seriously and promised to prevent it from happening again. Morgan Stanley MUFG Securities also said it took the issue seriously and would quickly provide a plan to fix it.

The banking sector has long pushed officials to relax rules, saying it would help customers more if banks and their affiliated brokers could provide products and services jointly.

Mitsubishi UFJ Financial Group (MUFG) is among the top financial groups in the world. Based in Tokyo, it has around 350 years of history. MUFG has a global presence with more than 2,000 offices in about 50 nations.