Banks Introduce 'Non-Deposit Product Disclosure'... FSC Emphasizes "Consumer Protection and Enhanced Supervision"

Yoon Seok-heon, Governor of the Financial Supervisory Service

[Asia Economy Reporter Kim Hyo-jin] The Financial Supervisory Service (FSS) has decided to strengthen the financial consumer protection system by introducing banks' 'Non-Deposit Product Explanation Sheets' and enhance the supervision function of financial companies through organizational and personnel expansion. This measure aims to prevent financial accidents such as the large-scale losses from overseas interest rate-linked derivative-linked funds (DLF) and Lime Asset Management's private equity funds.

The FSS also plans to improve the financial sector's response capabilities to the spread of the novel coronavirus infection (COVID-19) through business continuity plans (BCP) for financial companies.

The FSS announced its 2020 business plan containing these details on the 12th.

The FSS intends to strengthen proactive activities to prevent consumer damage, such as activating consumer alerts and enhancing the linkage of mystery shopping with inspections. Accordingly, the FSS plans to require banks to provide a separate Non-Deposit Product Explanation Sheet when selling non-deposit investment products. The purpose is to enable consumers to pay attention by explaining the risks of non-deposit products in comparison with deposit products.

Additionally, the FSS plans to solidify the post-damage relief function by promptly handling disputes and complaints through the operation of dedicated investigation teams for major disputes and complaints, and on-site intensive processing systems. It will enhance the professionalism and fairness of work processing by expanding specialized dispute mediation committees by sector and strengthen cooperation with related agencies against financial crimes such as voice phishing and illegal financial advertisements.

Under the goal of 'establishing a fair financial market order,' the FSS plans to strengthen the supervision functions of financial product screening, analysis, and sales activities, and significantly expand related personnel and organizations to promote a culture of complete sales of financial products. To this end, it will conduct focused inspections on vulnerable sectors with high risks of unsound business practices, such as specialized private asset managers, insurance agencies (GA), and P2P companies.

Furthermore, the FSS will strictly respond to unfair trading practices through planned investigations of election-themed stocks and continue efforts to enhance the reliability and transparency of disclosure and accounting, including checking the actual conditions of external evaluations related to mergers and strengthening accounting audits in vulnerable accounting sectors. It also plans to establish a continuous monitoring system integrating complaints, market trends, and product sales status, and strengthen the linkage between financial companies' internal audits, continuous monitoring, and comprehensive inspections.

The FSS will actively respond to ensure uninterrupted financial services by financial companies, including BCP inspections and activation for COVID-19 response, and recognizing exceptions to network separation for telecommuting.

In addition, the FSS plans to maximize efforts to prevent damage and provide post-relief by inducing prompt support from the financial sector for small business owners affected by COVID-19 and strictly dealing with market disruption activities.

At the same time, the FSS announced that it will strengthen financial market monitoring and management and supervision of debt growth trends to prevent the expansion of systemic risks caused by global volatility due to COVID-19 and unstable factors such as household and self-employed debt.

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