'One Month Since Geumso Act' Financial Authorities "Resolved 58 Issues"

Contactless Financial Services That Were Suspended Are Also Resuming

[Asia Economy Reporter Park Sun-mi] "In the case of insurance products, whether it constitutes solicitation of financial products can be judged based on whether it is for the purpose of concluding a new insurance contract. For automobile insurance, since the insurer usually confirms the renewal of the contract annually and then a new contract is concluded, the renewal confirmation procedure can be considered solicitation. On the other hand, for indemnity health insurance, since the premium changes and a new contract is not concluded annually, it is difficult to consider it as solicitation behavior." - Key responses from field opinions

One month after the Financial Consumer Protection Act (FCPA) came into effect (March 25), financial authorities have evaluated that the initial uncertainties of the law’s implementation are gradually being resolved through discussions with the industry. The financial companies’ rapid response system for difficulties, established alongside the law’s enforcement, is becoming a representative communication channel on the ground, and guidelines (such as product explanations) to balance consumer protection and transaction convenience are also being prepared.

According to the Financial Services Commission and the Financial Supervisory Service on the 26th, a total of 113 field opinions were received through the 'Financial Companies Rapid Response System' established for the successful settlement of the FCPA. Among them, 58 cases, accounting for 51.8%, were replied to each industry. Many inquiries were about practical handling methods of newly introduced systems such as joint guarantees, retirement pensions, and internal control standards.

In response to the question, "In real estate project financing, can the construction company provide a joint guarantee for the corporate borrower of the project?" the financial authorities replied, "The construction company can provide a joint guarantee because it is considered a ‘corporation sharing the benefits of the project financing business with the borrower’ under the Financial Consumer Protection Supervision Regulations, where joint guarantees are permitted."

Regarding the question, "Does classifying consumer groups and providing financial product information constitute solicitation?" the answer was, "Providing the same information to broadly classified consumer groups based on age or specific income classes, which can be considered an unspecified majority, is advertising. However, if consumer groups are segmented through a combination of various information and product information is provided in a way that is effectively customized for specific consumers, it can be judged as solicitation."

Also, in response to a question about the relationship between the right of withdrawal from subscription and the investor cooling-off system under the Capital Markets Act, it was answered, "Withdrawal from subscription for investment products is possible within 7 days from the contract date or receipt of contract documents. However, for investment products where both the right of withdrawal and the investor cooling-off system under the Capital Markets Act Enforcement Decree apply, if the contract is concluded after the 2 business-day cooling-off period starting the day after the subscription date, the right of withdrawal can be exercised within 7 days (not business days) from the day after the contract date (or receipt of contract documents)."

Confusion Resolved by New Guidelines

Financial authorities decided to resolve some confusion caused by longer financial product explanation times and restrictions on unsuitable investment product sales after the FCPA enforcement by preparing guidelines. They judged that the recent confusion was largely due to the strengthened sanctions and the transfer of existing individual financial business laws (such as explanation obligations and suitability principles) to the FCPA, which had been operated in practice focusing on transaction convenience. Accordingly, they plan to resolve this by discussing and preparing guidelines necessary for establishing new practices that balance consumer protection and transaction convenience on the ground.

The authorities also evaluated that efforts to strengthen consumer protection in the field have been spreading since the FCPA enforcement. Among 38 non-face-to-face financial services temporarily suspended after the law’s enforcement, 30 will resume within this month. The remaining 8 are scheduled to resume by next month. In particular, kiosks and STMs (Smart Teller Machines) have all been normalized.

Some securities companies have produced instructional videos to help mobile transaction customers protect their rights before subscribing to high-risk products, and some card companies operate a 'dedicated customer counselor system' to communicate with customers about financial consumer rights protection, continuing efforts in each sector.

Financial industry associations are also preparing 'standard internal control standards' through internal control standard operation committees to ensure the smooth landing of consumer protection internal control standards, which will be enforced from September 25. By June, they plan to support reforming organizational cultures that induce incomplete sales such as excessive performance competition, so that consumer-friendly management is internalized.

A financial authority official said, "The initial confusion in financial sales sites after the FCPA enforcement is leading to improvements in the ‘transaction convenience-oriented sales practices’ that had been entrenched. Going forward, the FSC and FSS will continue to monitor and support the settlement of the FCPA through the 'FCPA Implementation Task Force.'"

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