“If dispute settlement is in progress for less than 20 million won, it is prohibited to file a lawsuit by financial companies.”

Financial authorities distributed ’10 Questions and 10 Answers to the Gold Law’ “Explaining the growing industry anxiety”

(Seoul = Yonhap News) Reporter Lim Soo-jeong Kim Yeon-sook = On the 25th, amid confusion and inquiries about the financial industry due to the enforcement of the Financial Consumer Protection Act (hereinafter referred to as the Gold Law), the financial authorities distributed ’10 questions and 10 answers’ containing explanations of the law.

The financial authorities said, “Most of the industry concerns that have been mentioned recently can be easily identified through laws and regulations, or have been answered in the existing’Frequently Asked Questions’ (FAQ). It’s done,” he explained.

Earlier, the financial authorities posted their FAQ answers on the website on the 18th and 17th of last month twice, and distributed the third commentary on that day.

The following is a summary of the explanation of the law of prohibition that the financial authorities guided on that day.

– The extent of the seller’s money return when the consumer exercises the right to terminate the illegal contract.

▲ When an illegal contract is terminated, the contract becomes invalid after the’time of termination’. Therefore, expenses (loan interest, card annual fee, fund fee and remuneration, investment loss, risk insurance premium) 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 scope of the money owed to consumers. However, in the case of contract termination, consumers usually pay fees (intermediate redemption fees, redemption fees, etc.) or penalties, but in the case of illegal contracts, they do not have to pay.

Looking at each financial product, if the interest rate at the time of termination of the deposit product is lower than the interest rate at maturity, the interest rate at maturity (excluding the preferential interest rate at maturity) is applied. Funds cannot charge an intermediate redemption fee, and fees and remuneration paid by consumers in relation to transactions prior to the time of termination are not refundable. In the case of a loan with a loan limit contract, the limit contract fee (a fee paid when the loan limit is not used) cannot be charged for the remaining contract period after termination.

– The criteria for judging small claims dispute settlement are.

▲ If the dispute settlement price is less than 20 million won and dispute settlement is in progress, filing a lawsuit by financial companies is also prohibited. The dispute settlement price is determined by the amount claimed by the consumer when applying for dispute settlement.

– Do you have specific guidelines for the fulfillment of the obligation to familiarize yourself with the product?

▲ The Enforcement Decree of the Enforcement Decree of the Financial Law stipulates that “an act of causing a person who has not been trained to perform duties in accordance with the internal control standards to do business related to the solicitation of contracts” is regarded as an unfair solicitation act. The determination of whether the obligation to familiarize with the product is fulfilled should be based on whether the financial company has established and fulfilled the job training items required for individual financial products as bylaws. This is a matter to be decided autonomously by financial companies taking into account the content of products and consumer protection policies.

– Whether the instructions must be provided in writing.

▲ The method of providing product descriptions is stipulated by electronic indication of intention, such as issuance in writing, 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.).

– Are there specific regulations on the core instructions in the law?

▲ The Supervisory Regulations of the Financial Law are stipulated to include’characteristics that differentiate them from similar financial products’,’disadvantages that may occur after a contract’, and’contact information that can be used when filing a complaint or requesting counseling’.

– How is the investment propensity assessment determined?

▲ The seller 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 principle, when a seller determines 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 consideration. In addition, the standards for judging suitability according to laws and regulations have been prepared within the scope of the existing Financial Investment Association’s’Standard Investment Recommendation Rules’.

– Are employees of financial institutions also subject to fines or punitive penalties?

▲ The six sales principles can impose a fine of up to 100 million won. A punitive penalty can be imposed only for violations of four regulations excluding the conformity and adequacy principle among the six sales principles. However, since the six sales principles are regulations that apply to financial product sellers and advisors, no fines or penalties are imposed on executives and employees for violating them.

– If there is any high-risk product in the investment product portfolio that is unsuitable for consumers, is it not possible to recommend it?

▲ The description of the risk level is not very different from the content regulated by the existing capital market law. The risk of financial instruments composed of multiple funds is evaluated by synthesizing the overall risk ratings of the constituent funds. In the case of variable insurance and personal comprehensive asset management account (ISA), when a consumer selects a fund at the time of contract, only the risk level of the selected fund needs to be explained. This means you don’t have to describe all the funds in your selection.

– It is difficult to establish internal control standards in line with the enforcement date of the law?

▲ The obligation to prepare internal control standards will take effect on September 25th. 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 financial authorities plan to establish’standard internal control standards’ by establishing an internal control standards committee for each financial industry association by the first half of this year.

– How is the law applied to Saemaul Geumgo, Nonghyup, Suhyup, and Forestry Cooperatives?

▲ These institutions are 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. The Financial Services Commission is in discussions with relevant ministries on how to apply the law to these institutions, and plans to prepare and announce an implementation plan in the near future.

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2021/03/25 10:05 sent