Abolishing the Cap on Punitive Surcharge Reduction... Financial Services Commission Approves Enforcement Decree of the Financial Consumer Protection Act

[Asia Economy Reporter Kim Hyo-jin] The cap on punitive fines and penalty reductions for financial companies violating the Financial Consumer Protection Act (FCPA) will be removed.

The Financial Services Commission announced on the 17th that it approved the draft enforcement decree of the FCPA, including this provision, at the regular meeting held on the 13th.

The approved draft reflects opinions received during the legislative notice period and the results of the Regulatory Reform Committee review.

Accordingly, the regulation limiting the reduction of fines and penalties to half has been deleted, allowing reductions exceeding 50%.

The FCPA stipulates that punitive fines may be imposed up to 50% of the income gained by financial companies through violations. Penalties can be up to 100 million KRW depending on the item.

The FSC also decided not to apply the exclusive obligation to one company (where agents must work for only one financial company) to loan brokerage agents and lease/installment finance solicitors.

This decision was made to accept the opinion that exceptions are necessary as applying the regulation to those who were not previously subject to the exclusive obligation could cause market confusion.

Regarding credit cards, the opinion to exclude debt information from consumer information required under the suitability principle was also accepted.

This consideration was based on the difficulty for credit card solicitors to request debt information from consumers and the partial ability to assess repayment capacity through credit scores provided by consumers.

On the other hand, the opinion to add public offering funds to the exceptions for the right to withdraw subscription was not accepted.

The explanation was that the exercise of withdrawal rights by some general investors in public offering funds is unlikely to significantly affect fund formation or returns, so the existing plan was maintained.

The draft enforcement decree of the FCPA will take effect on March 25.