On the 25th, the Financial Consumer Protection Act, which prevents the’second lime crisis’, comes into force. The picture shows a customer being consulted at a bank. Central photo.
Office worker A signed up for a private equity fund (trade finance fund) at a banking complex store at the end of 2019. It was 100% safe without loss and was able to earn 4% interest a year, so he left 300 million won without paperwork. Mr. A was anxious and kept the sales representative’s story as a recorded file. Repurchases of products that were signed up as they thought they were safe products stopped one year later.
In the future, incomplete sales of financial companies such as the case of Mr. A will be virtually blocked. It is in accordance with the Financial Consumer Protection Act (Money Soo Act), which takes effect from the 25th to prevent the’second lime situation’.
In the future, when financial companies sell products, they must comply with the six sales regulations (the principle of conformity and adequacy, obligation to explain, unfair behavior, unfair solicitation, and prohibition of exaggerated advertising). At the same time, the company has strengthened sales regulations and introduced punitive penalties. When selling products, exaggerated advertisements, unreasonable solicitations, unfair behaviors, or incomplete explanations should be subject to punitive penalties up to 50% of the sales amount. Sales staff can also pay a fine of up to 100 million won.
Main contents of the prohibition law. Graphic = Reporter Park Kyung-min [email protected]
Consumer rights have been further strengthened by the prohibition law. First of all, it has the right to withdraw subscription and terminate illegal contracts for all financial products. Withdrawal of subscription is the right to cancel the contract without penalty within a certain period of time after signing up for the product. You can cancel the contract within 14 days for loanable products, and for guaranteed products such as insurance within 15 days. For investment products, subscriptions can be withdrawn within a week only for financial products with complex investment structures such as equity-linked funds (ELF).
When a financial company violates the law, the contract can be terminated within 5 years from the date of the contract or within 1 year from the date of knowledge of the violation. This is the right to terminate the illegal contract newly established. Like the subscription withdrawal right, it is characterized by the ability to cancel the contract without paying fees or penalties.
In addition, consumers can also check financial transaction data (request to access data) owned by financial companies. It means that you can directly find the necessary data for disputes or litigation by the FSS. However, it will be available only after mid-September, taking into account the time for financial companies to maintain data and build the system.
Enforcement decree confirmed one week before the enforcement of the law
When the law is enforced, financial companies must prove their responsibility to prove damages. It means that when consumers claim damages, financial companies must prove that there was no intention or negligence, so they are bound to be sensitive to each and every provision of the law.
Although the rights of consumers have been strengthened in this way, voices of concern continue in the field. This is because an enforcement decree containing detailed regulations came out belatedly ahead of the enforcement of the law. It was on the 17th that the enforcement decree and supervisory regulations containing the most important detailed regulations for implementing the law were finalized. It wasn’t until eight days before the enforcement date of the law that the specific regulations were in hand. The law is enforced with insufficient time for financial companies to prepare, and confusion in the field will inevitably increase.
In addition, there is no specific content that takes into account the characteristics of each industry or product, and the industry is deepening its hardships. This is the reason why the financial sector is’left and right’ due to system maintenance and interpretation of the provisions of the law until the day before the enforcement of the law.
An official in the securities industry said, “The system has been reorganized so that only products that meet the consumer’s investment tendency (grade) can be viewed. I am embarrassed to state that there is.” The official sighed, “(according to the enforcement ordinance) we have to revisit our sales manual and train our employees, but we don’t have enough time.”
There are also many vague guidelines, and voices say that the difficulties in the field are great. An official in the banking industry said, “For example, according to the provisions of the law, if (consumer) uses the right to cancel a contract, financial companies cannot request fees and other fees. It is not clear whether or not to compensate with the contracted interest rate.”
One voice in the financial sector “Time is running out”
There is a reason why financial companies make a single voice saying, “Time is running out” with the enforcement of the law ahead. Compared with the’Amendment to the Use and Protection of Credit Information Act (Credit Information Act)’, the difference is clear. The enforcement decree of the Credit Information Act was finalized in August of last year, six months before the enforcement of the law in February.
The solution to the industry’s concerns about the lack of preparation time, etc., is the’six-month delay’. Some regulations, such as internal control standards that require a preparation period such as system construction, preparation of core manuals, and the right to request data access, have delayed the application period after six months. In addition, in the case of newly introduced or reinforced systems, it is a position that it will supervise based on consulting (guidance) for the next six months. It is interpreted as meaning that financial companies will not be subject to excessive administrative sanctions unless they violate any serious laws.
An official from the National Assembly, who requested anonymity, said, “I am concerned that despite the positive purpose of the (Money Soo Act) bill, an enforcement decree was enacted immediately before its implementation, which would reduce its effectiveness and increase the confusion in the field.” Sung Tae-yoon, a professor at Yonsei University’s Economics Department, said, “I had to take six months to implement it after preparing for the purpose of the bill to be properly reflected.”
Reporter Yeom Ji-hyun [email protected]
