[100 Days of the Financial Consumer Protection Act] Upcoming Guidelines... 'Exemption Clauses' Likely Excluded

Financial Sector Demands 'Exemption Criteria' with Detailed Guidelines
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Concerns Persist Over Financial Firms' Conservative Stance for Now

[Asia Economy Reporter Kim Jin-ho] Financial authorities will soon distribute guidelines on the core explanation documents related to product sales as a follow-up measure to the implementation of the Financial Consumer Protection Act (FCPA). However, the so-called ‘exemption criteria’ requested by the financial sector are unlikely to be included, casting doubt on the effectiveness of the guidelines. If specific cases are not clearly stated, it is expected that financial companies will maintain a conservative stance for the time being.

According to the financial sector on the 30th, the financial authorities plan to complete the distribution of the FCPA guidelines (obligation to explain compliance, internal control standards, financial product risk assessment standards) by mid-July at the latest. A financial authority official said, "We are currently accelerating preparations for the distribution of the guidelines and plan to provide sequential guidance from early to mid-next month."

The financial sector’s focus is on the ‘obligation to explain compliance’ among the three FCPA guidelines, as this is the most challenging part in the field since the law’s implementation. Due to the burden of disputes surrounding the obligation to explain, so-called ‘soulless’ customer service is occurring among frontline staff. The time required for fund subscriptions, which used to take 20 minutes before the FCPA, has increased to up to one hour, causing the greatest inconvenience to customers.

The industry hopes that the ‘obligation to explain compliance’ guideline will include detailed instructions for frontline staff. They are requesting clear criteria that reduce product sales time to minimize customer inconvenience while ensuring no violation of the FCPA. A banking sector official said, "Since the possibility of legal violations is the biggest concern for financial companies after the FCPA’s implementation, it is most important to have detailed guidelines including exemption criteria so that frontline staff can work smoothly."

On the other hand, financial authorities believe that such exemption criteria could effectively become a ‘get-out-of-jail-free card.’ A Financial Services Commission official expressed skepticism, saying, "We cannot accept financial companies relying solely on the guidelines without making efforts to interpret the regulations themselves." Accordingly, the obligation to explain compliance guideline to be distributed by the financial authorities is expected to be limited to guidance on efficient methods of fulfilling the obligation to explain, such as ‘it is acceptable to explain only summarized content,’ and principles and precautions for preparing the core explanation documents.

The problem is that if the ‘obligation to explain compliance’ guideline lacks clarity and specificity, confusion in the field will continue for the time being. Without clear examples, frontline financial staff will inevitably adopt a conservative approach toward consumers. A financial sector official said, "Since misinterpreting the guidelines could lead to violations of the FCPA in the future, they must act cautiously and as safely as possible."

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