Crying Out for 'Consumer Protection'... Financial Dispute Resolution Takes 10 Times Longer Than the Regulatory Deadline

Banking Sector Dispute Resolution Takes an Average of 353 Days Until 'Acceptance'
Takes Over 10 Times Longer Than the 30-Day Deadline Set by the Financial Consumer Protection Act
Severe Staff Shortage... Financial Supervisory Service Requests "20 Additional Personnel"
Assemblyman Yoon Chang-hyun Urges "Improvement in Dispute Resolution Processing Speed"

[Asia Economy Reporters Sunmi Park, Seungseop Song]Kim Sangcheol (45, pseudonym) applied for dispute mediation with the Financial Supervisory Service (FSS) at the end of last year. This was because the insurance company refused to pay the insurance money that his mother was expected to receive, stating it was "difficult according to the policy terms." Kim thought the issue would be resolved quickly after seeing the regulation that it should be processed within 30 days, but it took 130 days to receive a response. Moreover, the response conveyed the insurance company's position that they could not pay the insurance money and included a statement advising him to file a lawsuit in court if he felt unfairly treated.

The dispute mediation process between financial companies and consumers has been found to take nearly ten times longer than the legally stipulated deadline. This is due to the increased demand for dispute resolution caused by more complex financial products, while the FSS’s dedicated dispute mediation personnel are severely insufficient. Recently, the FSS requested the Financial Services Commission (FSC) to increase the number of dedicated dispute mediation staff by about 20, but has yet to receive a definite answer. There are calls for measures to shorten the processing time, even if it requires assistance from external organizations.

According to data submitted to Yoon Changhyun, a member of the National Assembly’s Political Affairs Committee from the People Power Party, by the FSS on the 30th, it took an average of 353 days to process 115 banking sector financial disputes as ‘accepted’ in the first half of this year. This means the results were received about a year after the disputes were filed. The processing time increased more than 100 times compared to 30 days in 2018 and nearly doubled compared to 183 days last year. The situation is similar in the non-banking sector. The loan, insurance, and financial investment industries saw dispute processing times increase from 51 days, 51 days, and 46 days last year to 130 days, 77 days, and 109 days in the first half of this year, respectively. Only the credit card sector shortened its processing time from 30 days last year to 24 days in the first half of this year, the only sector to do so.

Financial dispute mediation is a procedure where the FSS mediates disputes filed by consumers against financial companies. According to the Financial Consumer Protection Act, a decision such as acceptance, dismissal, or rejection must be made within 30 days from the date of receipt.

Severely Insufficient Dedicated Personnel... "Need to Develop Measures to Improve Processing Speed"

Although financial consumer protection is emphasized, the lengthening of dispute mediation processing times is due to the severe shortage of dedicated dispute mediation personnel within the FSS. In the organizational restructuring of the FSS earlier this year, the Dispute Mediation Bureau under the Financial Consumer Protection Department was increased from two to three to respond to the rapidly increasing dispute demand. However, the total number of staff dedicated to dispute mediation across all financial sectors is only 39, including 3 for banking, 6 for financial investment, and 26 for insurance. This is only 1 to 2 more than during the 2019-2020 private equity fund crisis.

A senior FSS official stated, "The delay in confirming the amount of damages due to the private equity fund redemption suspension issue has also contributed to the overall lengthening of dispute processing times, but fundamentally, there is a severe shortage of personnel to adequately strengthen consumer protection." He added, "We requested the FSC to increase about 20 specialized dispute processing personnel, but with many pressing issues in digital supervision such as Merge Point and virtual currency, it is uncertain whether the staffing increase will be properly implemented."

If internal staffing increases are difficult, there are calls to devise ways to speed up processing by seeking help from external organizations. Representative Yoon emphasized, "Financial supervision exists to protect consumer rights and interests. Since both the results and processing speed of dispute mediation are important, it is time to consider entrusting on-site inspections and preliminary reviews of cases to specialized institutions to accelerate the process."

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