FSC: "Fines Under Financial Consumer Protection Act to Be Based on Transaction Amount"

Under the Financial Consumer Protection Act, fines will now, in principle, be determined based on the transaction amount of financial products. The range of rates used to calculate fines has also been subdivided, allowing for a more detailed consideration of the degree of violation.

The Financial Services Commission announced on November 19 that it had approved a revision to the “Supervisory Regulations on Financial Consumer Protection” during its 20th regular meeting.

This revision was made to clarify the calculation standards for fines, following criticism that the meaning of “income, etc.”-the previous standard set by the Enforcement Decree of the Financial Consumer Protection Act-was ambiguous.

The supervisory regulations now specify the principle that “income, etc.” should be calculated based on the transaction amount, and set out the fine calculation standards for each product type, including deposit products, loans, investment products, and insurance products.

However, in some cases, it may be unreasonable to calculate fines solely based on transaction amounts depending on the type of violation. For such cases, exceptions have been established to allow for alternative calculation methods. For example, in the so-called “tying” sales practice, where consumers are forced to purchase other products such as savings or insurance as a condition for receiving a loan, the fine will now be calculated based not only on the loan amount but also on the transaction amount of the financial products that consumers were coerced into purchasing.

Previously, the fine rate brackets were classified only as 50%, 75%, and 100%. These have now been subdivided into 1-30%, 30-65%, and 65-100%, allowing for a more precise assessment of illegality. As a result, the minimum fine has been lowered from 50% of “income, etc.” to 1%.

The revised supervisory regulations take effect starting today.

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