Korea Federation of Banks to Start Pre-Review of Bank Advertisements on the 17th

[Asia Economy Reporter Eunju Lee] The Korea Federation of Banks is establishing an organization for financial advertisement review and will begin pre-reviewing financial advertisements starting from the 17th. This follows discussions within the industry after the enactment of the Financial Consumer Protection Act (FCPA) last year, granting the Federation of Banks its own authority to review advertisements. Accordingly, banks will now need to pass not only internal reviews but also Federation reviews when advertising products such as savings and deposits.

According to the financial industry on the 7th, the Federation of Banks' Self-Regulation Department will start pre-reviewing certain advertisements for banks' savings, deposits, and loan products from the 17th. The advertisements subject to review are limited to six types of savings and deposit products. For savings and deposit products, the review targets include linked savings deposits requiring performance from other companies upon product subscription, products with interest rates applied differentially based on fluctuations in benchmark indices such as stock prices and exchange rates (requiring sufficient explanation about interest rate changes according to stock trends), and savings and deposits with differential interest rates based on deposit balance limits (such as parking accounts, requiring clear explanations of conditions to receive the stated interest rates). For loans, the review covers household loans linked to guarantee institutions (requiring guidance on fees payable to guarantee institutions such as the Korea Credit Guarantee Fund), other collateral loans excluding real estate, and loans linked to foreign exchange derivative products. The review will focus only on products that are relatively complex and have a high likelihood of consumer misunderstanding among the various products sold by banks.

According to the review manual prepared through consultations between the Federation and the banking sector, the Self-Regulation Department must issue a judgment of eligible, conditionally eligible, or ineligible within three days after receiving an advertisement review application from a bank. The review targets include not only TV advertisements but also posts on platforms such as YouTube and blogs. To facilitate 'quick reviews,' the Federation has also established a system to share review results with compliance officers at each bank. This system allows immediate sharing of review results conducted first by each bank to promote efficient reviews. A Federation of Banks official explained, "This is a system that monitors and shares in real-time all review results, not only for the six products reviewed by the Federation but for all reviews." He added, "In the future, the Federation may conduct overall inspections of advertisement reviews at the organizational level."

Until now, unlike the Korea Financial Investment Association, Life Insurance Association, General Insurance Association, and Credit Finance Association, the Federation of Banks did not have the authority to review bank advertisements. Each bank conducted internal reviews before advertising products. However, with the enactment of the Financial Consumer Protection Act last year, discussions arose that the Federation of Banks should be granted advertisement review authority like other financial sector associations, resulting in the Federation obtaining this authority. A Federation of Banks official stated, "There have been no major incidents caused by advertisements even when only banks' voluntary reviews were conducted," adding, "Therefore, the current additional review by the Federation is not so much about addressing increased risks of consumer misunderstanding in bank advertisements but rather about resolving legal interpretation issues that may arise during internal reviews as new banks such as internet banks increase."

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