Regulators halt Japan Post insurance sales

Bloomberg

Japan’s financial regulator ordered a three-month suspension of insurance sales by two units of Japan Post Holdings Co as punishment for improper sales practices.
The Financial Services Agency said it found examples of Japan Post customers being sold unduly expensive policies, without proper explanation of what they were buying. The penalty applies to the group’s mail and insurance subsidiaries, the FSA added in a statement.
Japan Post Holdings Chief Executive Officer Masatsugu Nagato and other senior group executives are expected to step down over the scandal, JNN has reported.
The FSA order follows revelations that elderly people and others bought unnecessary insurance products as a result of pressure on post office staff to meet sales targets. A third-party probe last week found 12,836 cases where customers said they were subjected to problematic sales practices.
Japan Post Insurance Co is one of the country’s largest insurance firms, with total assets of 73 trillion yen ($667 billion) as of end-September. The Japan Post group has about 400,000 employees and runs 24,000 post offices across the country.
The third-party panel report painted a damning picture of Japan Post’s work culture, in which employees were chastised in front of colleagues for poor performance.
The scandal has shocked the Japanese public, especially in rural areas, where many people rely on the nation’s post offices for financial services as well as mail delivery.
The postal business has been suffering from a steady decline in mail volumes. The group’s two financial units, Japan Post Bank Co. and Japan Post Insurance, earn over 90% of group profit but have been hurt by diminishing returns on their investment portfolios at a time of ultra-low interest rates.
The scandal has also forced the government to consider holding off its plan to sell $10 billion worth of shares in Japan Post Holdings, according to people familiar with the situation