[Song Seungseop's Financial Light] What Is the 'Unilateral Binding Force' Promised by Lee Jae-myung?

Finance is difficult. Confusing terms and complex backstories are intertwined. Sometimes, you need to learn dozens of concepts just to understand a single word. Yet, finance is important. To understand the philosophy of fund management and consistently follow the flow of money, a foundation of financial knowledge is essential. Therefore, Asia Economy selects one financial issue each week and explains it in very simple terms. Even if you know nothing about finance, you can immediately understand these ‘light’ stories that illuminate the ‘light’ of finance.

[Asia Economy Reporter Song Seung-seop] As the presidential election approaches, each candidate is presenting pledges in various fields. Many citizens are paying close attention to the candidates’ pledges. The financial sector is no different. There is a particularly sensitive pledge: the ‘unilateral binding effect.’ The term sounds difficult and may seem irrelevant to you. However, the unilateral binding effect is very important and closely related even to individual financial consumers.

The word ‘unilateral’ means that something operates one-sidedly for one party. Simply put, it means that rules or regulations are not applied to everyone but only to some. Since the rules are not equal, naturally, there are people who benefit and people who are disadvantaged.

The unilateral binding effect is similar. It is a system that grants rights favorable to financial consumers when disputes arise between financial companies and consumers. If the financial authorities issue a ‘mediation proposal’ and the financial consumer agrees, the financial company must comply with the proposal unconditionally?this is the unilateral binding effect. Currently, both the financial consumer and the financial company must accept the proposal for a ‘settlement’ in court.

Why did discussions about this system begin? It is because financial companies, which should take responsibility when various financial accidents occur, refused to accept dispute mediation proposals and delayed decisions. Despite individual investors suffering losses amounting to billions of won, quick compensation was not made, causing delays in consumer relief. Former Financial Supervisory Service Governor Yoon Seok-heon also instructed during his tenure to “actively work on measures (unilateral binding effect) to secure the effectiveness of the dispute mediation system.”

The debate over the previously stalled unilateral binding effect has recently reignited. This is because Lee Jae-myung, the Democratic Party presidential candidate, announced the unilateral binding effect system as his first financial pledge. Candidate Lee said, “Binding force should be recognized for small insurance claims (under 20 million won),” and “Measures will also be taken to secure the expertise and independence of the Dispute Mediation Committee.”

Financial companies express concerns that the unilateral binding effect could have significant side effects. While they agree with the purpose of consumer protection, they warn that the number of black consumers who abuse the system could increase. Also, although the ‘right to a trial’ is a constitutional right, they argue that the introduction of the unilateral binding effect excessively infringes on corporate rights.

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