Strengthened Protection for 2.5 Million Won Living Expense Deposits... Core Risk Standards Established for Public Funds

Financial Consumer Protection Advisory Committee Meeting Held by Financial Supervisory Service

Improvements to Designation of Insurance Policy Claim Representatives

The longstanding practice of banks withdrawing living expenses from customer deposits without proper consent or confirmation is expected to be curbed.

Financial Supervisory Service Headquarters, Yeouido, Yeongdeungpo-gu, Seoul. Financial Supervisory Service

On April 26, the Financial Supervisory Service announced that on April 23, under the leadership of Governor Lee Chanjin, it held the second meeting of the Financial Consumer Protection Advisory Committee and discussed consumer protection-related tasks, including this issue.

First, the banking sector will improve its business practices to strengthen the protection of minimum living expense deposits. Under the current system, deposits of up to 2.5 million won are classified as non-seizable claims. However, many banks have continued the practice of offsetting loans and deposits before confirming the intentions of depositors. As a result, depositors have had to engage in legal disputes with banks to prove whether their deposit claims qualify as minimum living expenses.

To address this, the Financial Supervisory Service plans to expand the range of acceptable documentation—such as account information aggregation records—that can be used to prove minimum living expenses. The agency will also encourage banks to provide sufficient advance notice and time for explanation before the scheduled offset date.

Measures to prevent a recurrence of incidents such as the total loss in overseas real estate funds were also discussed. A "core risk standard" will be established to summarize and present the main risks on the first page of simplified investment prospectuses, tailored to consumer expectations. Up to four key risks, including the possibility of principal loss, as well as the highest historical loss rate, will be presented together, and visual materials will be used to aid understanding.

Additionally, improvements will be made to insurance policy terms and product descriptions. The Financial Supervisory Service plans to form a task force comprising consumers, experts, and industry representatives to simplify policy terms, clarify language, and expand information delivery methods such as using infographics.

The Advisory Committee also discussed measures such as transitioning to a proactive supervisory system to respond to changes in the digital financial environment and improving the evaluation system for voice phishing response capabilities.

A Financial Supervisory Service official stated, "The advisory opinions presented today will be actively reflected in the process of advancing financial supervision, inspection work, and system improvements, and we plan to strengthen the proactive consumer protection system."

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