Early Complaints under the Financial Consumer Protection Act Account for 80% from Banking and Insurance Industries (Comprehensive)

44 Initial Financial Complaints, 21 Related to Insurance
Many On-Site and Practical Opinions on Policy Loans
"Failure to Faithfully Prepare Detailed Guidelines" Also Criticized

[Asia Economy Reporter Song Seung-seop] It has been identified that most of the complaints received by financial authorities during the early implementation of the Financial Consumer Protection Act (FCPA) came from the insurance and banking industries. The inquiries included not only questions about the six major principles of the FCPA but also numerous practical-level queries. There are criticisms that initial confusion arose due to the lack of detailed guidelines.

According to data obtained through the Financial Services Commission on the 18th, as of the 11th of last month, 81.8% of the 44 field opinions submitted to the ‘Financial Company Rapid Issue Resolution System’ came from the insurance (21 cases) and banking (15 cases) industries. Three complaints were received from financial investment companies, and two complaints each from specialized credit finance companies and loan businesses. The savings bank industry had one case.

The Rapid Issue Resolution System was established jointly by the Financial Services Commission, the Financial Supervisory Service, and each industry association to ensure the successful settlement of the FCPA. It has been jointly operated since March 31 to support the resolution of difficulties related to the FCPA.

In the insurance industry, most inquiries were practical-level questions such as policy loans, early repayment fees, the applicability of the FCPA to exclusive reinsurers, and the legal nature of retirement pensions under the FCPA. There were also questions about whether payments should be made if an unsuitable customer requests a policy loan, and if payment is not possible, whether it is permissible to provide guidance to the customer on how to use the policy loan.

Some insurance companies inquired about how to apply the six major principles (principle of suitability, principle of appropriateness, duty to explain, prohibition of unfair business practices, prohibition of improper solicitation, prohibition of false or exaggerated advertising) in the field. One insurance company asked whether telemarketing (TM) planners could replace the duty to explain with recorded confirmation. Another insurance company inquired whether providing a small prize by lottery to customers who applied after being informed about the insurance contract loan system for all customers falls under the ‘principle of suitability.’

Continuous inquiries on the six major principles and practical matters... "Guidelines not detailed enough" criticism

The banking industry had questions such as whether the right to withdraw subscription can be exercised for early foreign currency loans and whether the principle of suitability under the FCPA can be exempted for retirement pensions. Some banks were concerned whether selling products with only one repayment method constitutes a violation of the law by forcing a repayment method.

One bank asked the financial authorities how the bank can prove if a customer who is not subject to the principle of appropriateness expresses an intention to subscribe to a specific product, and later the consumer claims a violation of the principle of suitability due to losses and demands contract cancellation on illegal grounds. Another bank inquired whether a deposit-secured loan product offered through kiosk (non-face-to-face) transactions, which presents only a single product, is considered solicitation.

Financial investment companies had many inquiries related to advertising. They asked whether it is necessary to state that the prospectus and terms and conditions should be read when advertising stocks, on-exchange bonds, and on-exchange derivatives, and how to describe situations where losses occur and the estimated amount of losses in advertisements for investment products. There was also a request to review whether the starting point for exercising the right to withdraw subscription in securities company margin trading is based on contract conclusion or loan disbursement.

Other industries also had many inquiries related to advertising and promotion. Specialized credit finance companies asked whether product explanations for which advertising review was completed before the FCPA enforcement can be reviewed after the standard terms and conditions are revised. The loan industry inquired whether simply posting products on the homepage should be considered advertising. Accordingly, there were also questions about whether loan handling through the loan application menu included in the simple product guide on the homepage should be regarded as non-solicitation.

The continued field opinions after the enforcement of the FCPA have been criticized as a result of the financial authorities’ lack of meticulousness during the law-making process. Professor Kim Sang-bong of Hansung University’s Department of Economics said, "(Insurance and banking) are industries that have been significantly impacted and disrupted by the FCPA," adding, "It is problematic that detailed guidelines were not carefully prepared during the law-making process, causing confusion."

Meanwhile, as of the 26th of the same month, field opinions nearly doubled to 113 cases. At that time, the authorities explained that 51.8% had been responded to by the industry and that the initial uncertainties were gradually being resolved.

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