D-1 Before the End of the Financial Consumer Protection Act Guidance Period... Industry Enters 'Cautious Mode' (Comprehensive)

End of Financial Consumer Protection Act Guidance Period on the 24th

[Asia Economy Reporter Park Sun-mi] The grace period for the Financial Consumer Protection Act (FCPA) is just one day away from ending. Since the financial authorities have stated that even after the grace period ends, a supplementary period will be granted during which no enforcement actions will be taken, the field is inevitably adopting a conservative approach, but there is a prevailing atmosphere that they have at least bought some time.

According to the financial industry on the 23rd, most domestic commercial banks and regional banks have completed preparing investment product brochures reflecting the FCPA requirements by the 24th of this month, when the grace period ends, and are ready to implement them starting from the 27th. Some banks plan to complete supplementary work by the end of the year, judging that some improvements are needed in operating the investor suitability assessment system.

In the banking sector, with the application of the revamped investment product brochures, sales of high-difficulty products such as leveraged index products, which were difficult to sell before, can resume. However, conservative operation is inevitable. A bank official said, "Since it is the early stage of applying the revamped brochures, we have no choice but to sell conservatively and cautiously," adding, "It is fortunate that a supplementary period is granted even after the FCPA grace period ends, but we have to be cautious until the system is fully established."

A financial authority official said, "Until now, financial investment product sellers such as banks and securities firms used the investment brochures prepared by asset managers as they were when creating key product brochures, but due to the application of the FCPA, they hurriedly proceeded with the brochure revision work." He added, "For sellers whose revisions are delayed and require supplementation, the Financial Supervisory Service and the Korea Financial Investment Association will work together to complete the supplementary work within the year."

Financial platform companies fail to find solutions and suspend some services

On the other hand, financial platform companies that must reflect the FCPA contents immediately or suspend services are in a state of emergency. During the grace period, the financial authorities issued guidelines to companies that acknowledged the authorities' policies and agreed to correct violations to suspend services until the legal issues are resolved. Accordingly, Kakao Pay's online linked investment (P2P) service has been suspended, and in the insurance sector, services such as ▲Driver's Insurance (Samsung Fire & Marine Insurance) ▲Pet Insurance (Samsung Fire & Marine Insurance) ▲Exercise Insurance (Meritz Fire & Marine Insurance) ▲Mobile Phone Insurance (Meritz Fire & Marine Insurance) ▲Overseas Travel Insurance (KB Insurance, NH Nonghyup Insurance, Hyundai Marine & Fire Insurance) ▲and the 'Insurance Solver' service provided through professional counselors affiliated with Rich & Co are expected to be terminated.

The fund sector avoided service suspension by completing the revision work. When selecting investment services within the Kakao Pay platform, a message first appears informing that the sales and brokerage entity is Kakao Pay Securities, and at the top of the fund investment screen, it clearly indicates that Kakao Pay Securities is the service provider. When selecting each fund product, the message informing the service provider is confirmed again before proceeding with the investment.

Fintech company Fink, a joint venture between SK Telecom and Hana Financial Group, will also temporarily suspend its 'insurance recommendation service.' The 'insurance recommendation service,' launched in August 2019, was judged to have potential violations related to the FCPA, leading to its temporary suspension. Toss has set a policy to complete corrective work during the supplementary period without suspending existing services. Regarding the insurance sector, where the supplementary work is not yet complete, Toss stated, "We plan to complete improvements in insurer recognition and counselor connection processes within the year."

Since it is difficult to complete registration for loan solicitors (small and medium corporations, individuals) and lease/installment solicitors by the 24th, who have been operating before the FCPA enforcement, an additional correction period has been granted allowing those who apply for association registration by October 24 to complete registration within the year.

A financial industry official said, "Since the financial authorities are granting additional time to complete corrective work for areas needing further supplementation during the FCPA grace period, it is unlikely that the first financial company violating the FCPA will appear immediately," adding, "However, since conservative operation or restrictions on financial services by some financial product sellers may occur from the 27th when the FCPA is fully enforced, initial confusion should be anticipated."

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