[Asia Economy Reporter Song Seung-seop] Household loan borrowers are no longer allowed to subscribe to products such as funds and bancassurance at the same bank around one month before and after the loan execution.
According to the financial sector on the 28th, commercial banks recently announced that they will change the inspection standards for 'coercive sales practices' at branch offices following the enforcement of the Financial Consumer Protection Act.
Coercive sales practices refer to banks bundling guaranteed products and investment products such as bancassurance, funds, and ELS (Equity-Linked Securities) when issuing loans. The Financial Consumer Protection Act defines the inspection target as 'all debtors' to prevent coercive sales practices.
As all debtors are subject to inspection for coercive sales practices, banks are effectively prohibited from selling investment and guaranteed products for 30 days before and after the loan execution date. If a consumer wants to take out another loan within one month after subscribing to a fund, they must cancel the fund product. Employees selling financial products must also confirm whether customers planning to subscribe have loan plans within the next month.
Another change is the assessment of the borrower's basic information such as assets, liabilities, loan purpose, and principal and interest repayment plans through the 'Suitability and Appropriateness Customer Information Confirmation Form.' Previously, loan approval, applicable interest rates, and limits were set based on the consumer's employment certificate, income verification documents, and credit rating. However, with the confirmation form, the customer's specific economic situation is assessed to determine the loan level.
Additionally, with the introduction of the 'Loan Contract Withdrawal Right,' contracts can be freely withdrawn within 14 days. The Financial Consumer Protection Act does not limit the loan amount or the number of times a loan contract can be withdrawn. This broadens consumers' opportunities to switch to more favorable products at other banks even after receiving a loan.
However, interest for the period during which the loan was executed will still be incurred in such cases.
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