Financial Authorities Activate FSCMA Implementation Task Force... Discussion on FSCMA Guidelines

Guidelines for the Financial Consumer Protection Act: Plan to Implement 5 Key Sales Regulations First

[Asia Economy Reporter Park Sun-mi] The financial authorities have decided to establish guidelines within the necessary scope for the stabilization of the Financial Consumer Protection Act (FCPA), considering the balance between consumer protection and the autonomy of the financial sector. The guidelines will include measures to improve consumer inconvenience caused by the practice of conducting investor suitability assessments once a day and efficient methods for fulfilling explanation obligations.

On the 15th, the Financial Services Commission (FSC) held the first meeting of the FCPA Implementation Task Force together with the Financial Supervisory Service (FSS) and various industry associations. At the meeting, they reviewed the progress of the guidelines for FCPA implementation, major trends by industry, and education and publicity plans. Future operation plans for the task force were also discussed.

The FCPA guidelines will initially focus on five core business regulations where regulatory uncertainty felt on the ground could cause consumer inconvenience: ▲ enhancing the efficiency of investor suitability assessments ▲ advertising review ▲ standards for risk grading of investment products ▲ methods for preparing product brochures and key fact statements to improve explanation efficiency ▲ and standard internal control criteria and standard financial consumer protection criteria.

First, in the investor suitability assessment section, the guidelines will include measures to alleviate industry uncertainty and resolve consumer inconvenience by enhancing the efficiency of investor suitability assessments. Key contents include streamlining investor suitability assessments to shorten offline transaction times and improving consumer inconvenience caused by the practice of conducting investor suitability assessments once a day.

In the advertising review section, the guidelines will clarify the scope of business advertisements and list items to be checked during prior review of advertisements by financial company solicitors. The standards for risk grading of investment products will be specified based on the current standard investment solicitation rules. The methods for preparing product brochures and key fact statements to improve explanation efficiency will include efficient ways to fulfill explanation obligations and principles and precautions for preparing brochures (including key fact statements). Lastly, in the areas of standard internal control criteria and standard financial consumer protection criteria, the guidelines will specify the operation plans for association-specific standard internal control criteria and standard consumer protection criteria, as well as the items to be included in the standards.

Meanwhile, the FCPA Implementation Task Force is composed of three subcommittees: ▲ the Issues Resolution Subcommittee ▲ the Guidelines Subcommittee ▲ and the Monitoring and Education Subcommittee. The Issues Resolution Subcommittee is responsible for promptly responding to legal interpretations and suggestions received through the ‘Financial Company Issues Rapid Response System.’ It will check the response status weekly and notify reasons and plans if responses are delayed. Major inquiries and explanatory materials will be disclosed on the dedicated online FCPA bulletin board. The Guidelines Subcommittee will prepare detailed guidelines for effective regulatory compliance and check and support the implementation status of individual financial companies. The Monitoring and Education Subcommittee, centered on associations, will monitor the implementation status of the FCPA in their respective sectors and conduct education and publicity activities for financial companies and consumers.

An FSC official stated, "The FCPA Implementation Task Force will regularly check and share progress by subcommittee at the end of each month and discuss response measures. Around the end of April, the second meeting of the FCPA Implementation Task Force will be held to review progress by subcommittee and respond promptly to any issues."