[Reporter’s Notebook] Patchwork Guidelines for the Financial Services Act... Doubts About Practical Effectiveness on the Ground

Eun Sung-soo, Chairman of the Financial Services Commission, is listening to bank employees about the current status of the Financial Consumer Protection Act.

[Asia Economy Reporter Kwangho Lee] "The financial authorities are issuing guidelines every other day, so it's quite overwhelming. It's already complicated, and with these constant 'patchwork' updates, it's getting harder and harder to keep up with the content, handle work, and assist customers." (A bank teller)

On the 25th, the Financial Services Commission (FSC) distributed another set of instructions as confusion intensified on the front lines following the enforcement of the Financial Consumer Protection Act (FCP Act). This is already the third set of guidelines issued within a week since the guideline was released on the 24th, a day before the law took effect.

Previously, the authorities had stated they would strengthen communication with financial companies to ensure the law settles quickly, which can be interpreted positively. The issue, however, is how effective and practical these belated improvement measures are in the field.

According to the guidance issued by the FSC on the 29th, "explanatory obligations do not apply when a general adult subscribes to a deposit." This is an improvement measure following confusion where it took over an hour to verbally read the product explanation from start to finish and record it when subscribing to funds after the law's enforcement.

However, there are concerns from the field. From the financial companies' perspective, who must prove responsibility for incomplete sales if problems arise later, they have no choice but to provide thorough explanations even if it takes more time rather than reducing product explanations.

The obligation to explain is one of the six core sales principles of the FCP Act. Financial company employees must provide important information when recommending contract conclusion to general financial consumers or when consumers request explanations. Violations can result in fines up to 50% of sales revenue and penalties up to 100 million KRW. If incomplete sales issues arise and customers claim they did not receive proper explanations, the financial company bears responsibility. In reality, financial companies cannot follow instructions to skip explanations.

FSC Chairman Eun Sung-soo commented on the growing confusion over the FCP Act, saying, "Unfortunately, 'quick quick' and consumer protection are difficult to reconcile," and added, "As the FCP Act settles and consumer protection work in the field becomes more familiar, the time required will naturally shorten."

As Chairman Eun mentioned, the time for product subscription may decrease once the system stabilizes to some extent. However, if the improvement measures are not felt by the field, no matter how many are issued, only trial and error that consumers cannot perceive will be repeated.

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