[Inside Chodong] The FCPA Faces Widespread Complaints... Just Getting Started Is Half the Battle

FCPA Enforcement D-2
Concerns Over Industry Readiness and Consumer Inconvenience

[Asia Economy Reporter Park Sun-mi] A few years ago, I visited a bank in China to open an account and attempted to sign up for a relatively simple financial product. I was surprised when the bank staff brought a camera and tried to record a video.

When I asked in disbelief, "Why are you filming me?" the staff explained that in China, video recording is a legal requirement when selling financial investment products. Just before turning on the camera, the staff kindly (?) informed me of the questions they would ask and even told me how to answer them. They hinted that if I answered incorrectly, I would not be able to sign up, so to join the financial product, I had to successfully complete the recording process.

Although the slow pace of the Chinese bank staff contributed, it took roughly 40 to 50 minutes from start to finish before I left the bank. I wondered what meaning there was in submitting the recorded video, which was conducted according to a scripted scenario, as evidence to the financial authorities. However, considering the frequent financial accidents and concealment of non-performing assets in Chinese banks in the past, I somewhat understood the financial authorities’ position that they had to establish regulatory measures to control these issues.

In Korea, the Financial Consumer Protection Act (FCPA) is just two days away from enforcement. It has finally reached the starting line after 10 years since the bill was first proposed, and one year after passing the National Assembly plenary session and preparing for enforcement. The enforcement of the FCPA could have taken even longer, but a series of private equity fund accidents in recent years accelerated the need to strengthen consumer protection and clarify the responsibilities of financial product sellers, speeding up the law’s implementation.

Despite the FCPA being enforced after many twists and turns, the unfortunate point is that although it aims for the right goal of strengthening consumer protection, it is not warmly welcomed by everyone involved.

The industry’s biggest complaint is the lack of preparation. Although the enforcement date is imminent, financial companies that are not fully prepared are in complete chaos. Related organizations were only formed around the year-end and New Year’s organizational restructuring season, and the IT and sales system transitions to cope with the changed regulations are still not properly in place. The financial authorities have also taken on the task of improving the vague enforcement guidelines of the FCPA. There is controversy over the interpretation of the right to terminate contracts due to violations of the FCPA, but the enforcement decree does not contain specific standards, and enforcement rules have not even been prepared, leading to criticism that preparations are insufficient.

Financial consumers are already intimidated by the fact that what used to take 10 to 20 minutes to sign up for financial products may now take up to an hour. Among office workers who used to briefly sign up for financial products during breaks or lunch hours, there are concerns that the long waiting times and more complicated subscription procedures could be inconvenient.

Of course, with the start of the FCPA, various inconveniences due to insufficient preparation and unexpected ‘gaps’ arising between regulations are inevitable. These issues can be sufficiently resolved during the six-month grace period before full enforcement.

If problems arise, solutions can be found and applied to fix them. The consensus to strengthen consumer protection in the financial market has been formed, and the fact that related industries are actively working toward this goal is something to encourage. It is a time when the financial industry needs encouragement rather than criticism so that it can practice customer-centric management through the FCPA and stay motivated without frustration.

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