[금소법 10문10답] When the illegal contract is terminated, how far will it be returned?

[이코노믹리뷰=정경진 기자] From today (25th), the Financial Consumer Protection Act (Money Soo Act) comes into effect. With the enforcement of the law, financial consumers are now widely guaranteed the right to withdraw their subscription or terminate illegal contracts.

Accordingly, consumers can freely withdraw their contracts within a certain period of time for investment products such as insurance and loan products excluding parts such as guarantee insurance and linked loans, high-level financial investment products, high-level discretionary investment contracts, and some trust contracts. Financial products can also withdraw their intention to subscribe and get the money already paid back.

In addition, for insurance products, the subscription may be withdrawn within 15 days from the date of receipt of the insurance policy or 30 days from the date of subscription, whichever is earlier, for investment products and loan products, within 7 days and 14 days from the date of contract conclusion, respectively.

The following is an answer to the major inquiries from the financial authorities since last February regarding the enforcement of the law enforcement agency.

◆ What is the scope of the seller’s money return when the consumer exercises the right to terminate the illegal contract?

▷ The right to terminate illegal contracts is the right of the consumer to terminate the contract in the middle of the violation of the regulation if the financial company violates the sales regulation. In this case, it is prohibited for the seller to ask the consumer for cancellation-related expenses such as fees and penalties.

That is, in principle, the effect of canceling an illegal contract becomes invalid after the’time of termination’. Therefore, expenses incurred in the process of providing services according to the contract from the conclusion of the contract to the point of termination are not included in the range of money owed to consumers after contract termination.

Usually, when the contract is terminated, the consumer bears a fee penalty, but in the case of an illegal contract, it cannot be imposed on the consumer.

◆ What are the criteria for judging small claims dispute mediation?

▷ The Financial Services Act prohibits filing a lawsuit by financial companies when dispute mediation with a dispute mediation price of 20 million won or less is in progress to prevent financial consumers from having difficulty in remedy after filing a lawsuit to avoid dispute mediation.

At this time, the dispute settlement price is stipulated as “the value of the rights or profits claimed through mediation (by the general financial consumer who applied for mediation) shall be within 20 million won”.

◆What is the criteria for determining whether the product familiarity obligation is fulfilled?

▷ The determination of whether the obligation to familiarize with the product is fulfilled can be judged on the basis of whether the financial company has established and fulfilled the job training items required for individual financial products as bylaws. Job training items required for individual financial products can be decided autonomously by financial companies taking into account product content and consumer protection policies.

◆ What is the method of providing the manual?

▷ The Enforcement Decree of the Gold Soap Act stipulates the method of providing product instructions by electronically expressing intentions such as paper issuance, mail (including e-mail), and text message. The electronic expression of intention includes showing the contents of the manual through the screen of an electronic device (mobile app, tablet, etc.).

◆What should be included in the core manual?

▷ Distinguishing characteristics from similar financial products, matters related to possible disadvantages after contract (risk grade, disadvantages in delinquency of principal and interest, matters that require familiarity with consumers due to frequent complaint disputes, etc.), contact information available when filing a complaint or requesting consultation Etc. In addition, in the first half of the year, each financial industry association plans to prepare a standard draft of the core specification.

◆What is the criteria for judging the suitability related to the conformity principle?

▷ The seller must be provided with the information necessary to determine the suitability from the customer and confirm from the customer that there is no abnormality. In addition, sellers should not recommend financial products that are not suitable for customers by judging the consumer’s ability to accept losses or repay loans based on the information provided by the customer. In addition, when a seller judges whether a financial product is unsuitable for a consumer, the financial law requires that the information provided by the consumer (age, property situation, understanding of financial products, investment experience, etc.) be taken into account in principle. In addition, the standards for judging conformity under the law were established within the scope of not deviating from the existing Financial Investment Association’s’Standard Investment Recommendation Rules’ to increase the acceptance of the site.

◆What are the criteria for imposing fines and punitive penalties?

▷ It is possible to impose a fine of up to 100 million won for violations of the six sales principles. The punitive penalty is 50% of the maximum income, and can be imposed only for violations of the four rules of conformity and adequacy among the six sales principles.

Since the six rules of sale are applied to financial product sellers and advisors, no fines or fines are imposed on employees for violations.

◆What is the content related to the risk rating of investment products?

▷According to the financial law, banks and securities companies must prepare a risk level for investment products and describe them in the manual. Factors to be considered when preparing a risk class include volatility of the underlying asset and the maximum amount of possible principal loss.

In the case of a large number of funds, the overall risk rating of the constituent funds is evaluated and evaluated, which is not much different from the content regulated by the existing capital market law.

In the case of variable insurance and ISA, when a consumer selects a fund at the time of contract, it is only necessary to describe the risk level of the selected fund.

◆When is the internal control standard enforced and what is included?

▷ The obligation to prepare internal control standards will take effect on September 25 this year. Relevant organizations and executives can prepare internal control standards in accordance with the enforcement date of the law and go through necessary procedures such as a general shareholders’ meeting and the board of directors.

The matters to be included in the internal control standards were stipulated mainly in the main matters of the’Financial Consumer Protection Best Practices’ (the Financial Supervisory Service administrative guidance), which have been applied by the financial sector for many years in order to increase the acceptability of the field.

In addition, by the first half of this year, each financial industry association plans to establish an internal control standards committee to establish’standard internal control standards’.

◆ Why are Saemaul Geumgo, Nonghyup, Suhyup, and Forestry Cooperatives not subject to the Geumso Act?

▷ Nonghyup, Suhyup, Forestry Cooperative, and Saemaul Geumgo were excluded from the scope of the law because the current supervision and sanction system was not reflected at the time of enactment of the law. In other words, the financial office is supervising, but there is no authority to take institutional measures. Unlike the current system, if the Nonghyup and the like are subject to the law, institutional measures are possible by the Financial Services Commission.

Since October of last year, the Financial Services Commission is reviewing the application of the gold law to the Saemaul Geumgo, Nonghyup, Suhyup, and Forestry Cooperatives with relevant ministries. Currently, related consultations are in progress, and plans to prepare and announce a plan with the relevant ministries as soon as possible after the enforcement of the prohibition against law.