Banks Preparing for Financial Consumer Protection Act Enforcement Strengthen Product Sales Procedures and Employee Training

[Asia Economy Reporter Kwangho Lee] Starting next month, with the enforcement of the Financial Consumer Protection Act (FCPA), banks are reorganizing their product sales procedures and strengthening employee training.

According to the financial sector on the 28th, major commercial banks are promoting and reviewing plans to record consultations with customers during the sale of all financial products in line with the FCPA enforcement on the 25th of next month.

This is interpreted as a measure to respond to the "burden of proof for damages by financial companies" included in the FCPA.

The FCPA focuses on ▲transition to a function-based regulatory system ▲expanded application of the six major sales principles ▲guarantee of the right to withdraw subscription and the right to terminate illegal contracts for financial consumers ▲securing the effectiveness of dispute mediation procedures ▲strengthening post-sanction measures through punitive fines ▲and the legalization of financial education. In particular, when a financial consumer files a lawsuit for damages against a financial company due to a violation of the explanation obligation, the financial company bears the burden of proof regarding intent and negligence.

Hana Bank and Woori Bank will expand the scope of recording the explanation process to all customers when selling funds starting from the 25th of next month.

Also, Woori Bank will improve its current method, where branch employees read the product explanation directly, to an "automatic reading method" going forward.

KB Kookmin Bank plans to establish and implement a financial consultation system that records investment propensity analysis and sales processes during financial product sales and analyzes whether there was any incomplete sales.

Shinhan Bank plans to use an artificial intelligence (AI) system to check whether there were any deficiencies in the product explanations.

Banks are also conducting extensive training for all employees, including branch counter staff who are the communication point with customers.

Since the beginning of this month, all commercial banks have been intensively conducting cyber training and online education for all employees. In March, practical training focusing on compliance during product sales will be provided to branch employees.

Banks are also actively building various systems to prevent financial accidents and "incomplete sales" and to strengthen internal controls.

NH Nonghyup Bank plans to establish an "integrated computer system" by June that can check and inspect all statuses related to non-deposit product sales, including product selection, sales, and post-management.

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