[Exclusive] After the Enforcement of the Financial Consumer Protection Act, 80% of Financial Company Complaints Are Related to 'Insurance and Banking'

44 Initial Financial Complaints, 21 Related to Insurance
Many On-Site and Practical Opinions on Policy Loans
"Failure to Faithfully Prepare Detailed Guidelines" Also Criticized

[Asia Economy Reporter Song Seung-seop] It has been identified that most of the complaints received by financial authorities during the early implementation of the Financial Consumer Protection Act (FCPA) came from the insurance and banking sectors. The inquiries included not only questions about the six major principles of the FCPA but also numerous practical-level queries. There are criticisms that initial confusion arose due to the lack of detailed guidelines.

According to data obtained through the Financial Services Commission on the 18th, as of the 11th of last month, 81.8% of the 44 field opinions received through the ‘Financial Company Rapid Issue Resolution System’ came from the insurance (21 cases) and banking (15 cases) industries. Three cases were received from financial investment companies, and two complaints each were received from specialized credit finance companies and loan companies. The savings bank sector had one case.

The Rapid Issue Resolution System was established jointly by the Financial Services Commission, the Financial Supervisory Service, and each sector’s association to ensure the successful settlement of the FCPA. It has been jointly operated since March 31 to support the resolution of difficulties related to the FCPA.

In the insurance industry, most inquiries were practical-level questions such as policy loans, early repayment fees, the applicability of the FCPA to exclusive reinsurers, and the legal nature of retirement pensions under the FCPA. There were also questions about whether payments should be made if an unsuitable customer requests a policy loan, and if payment is not possible, whether it is permissible to provide guidance to the customer on how to use the policy loan.

Continuous Inquiries on the Six Major Principles and Practical Matters... Criticism of "Insufficiently Detailed Guidelines"

Some insurance companies inquired about how to apply the six major principles (principle of suitability, principle of appropriateness, duty to explain, prohibition of unfair business practices, prohibition of improper solicitation, prohibition of false or exaggerated advertising) in the field. One insurance company asked whether telemarketing (TM) planners could replace the duty to explain by recording confirmation. Another insurance company asked whether providing a small prize by lottery to customers who applied after being informed of the insurance contract loan system for all customers falls under the ‘principle of suitability.’

The banking sector had questions such as whether the right to withdraw subscription can be exercised for initial foreign currency loans and whether the principle of suitability under the FCPA can be exempted for retirement pensions. Some banks were concerned whether selling products with only one type of repayment method constitutes a violation of the law by forcing a repayment method.

By category, inquiries related to advertising or promotion were the most frequent, with 10 cases. These included questions about whether simply posting products on the homepage should be considered advertising, and whether loan handling through a loan application menu included in simple product information on the homepage should be regarded as having no solicitation.

The continued field opinions from the insurance and banking sectors after the implementation of the FCPA have been criticized as a result of the financial authorities’ lack of meticulousness during the lawmaking process. Professor Kim Sang-bong of Hansung University’s Department of Economics said, "(Insurance and banking) are industries that have been significantly impacted and disrupted by the FCPA," adding, "It is problematic that the guidelines were not carefully prepared during the lawmaking process, causing confusion."

Meanwhile, as of the 26th of the same month, field opinions nearly doubled to 113 cases. At that time, the authorities explained that 51.8% had been responded to by the industry and that the initial uncertainties were gradually being resolved.