Strengthening Online Financial Product Subscription Procedures... Introducing 'Skip Prevention' and 'Intermediate Check'

Financial Services Commission Establishes 'Online Disclosure Obligation Guidelines'
Major Banks to Prioritize Application in Q1 Next Year

On the 7th, a scene at a bank counter in Seoul as major commercial banks continue to lower loan interest rates and raise interest rates on regular savings and installment savings products. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Sim Nayoung] When selling financial products online, financial companies must design screens so that consumers can fully understand the products and strengthen methods to confirm whether the explanations have been understood. For example, functions such as 'skip prevention,' 'button activation after a certain time elapses,' and 'mid-screen checks during explanation' should be included in the subscription process to ensure consumers thoroughly review product information and prevent immediate entry into the contract conclusion stage. Major banks are expected to reflect the guidelines starting with product types that can be prioritized as early as the first quarter of next year.

On the 11th, the Financial Services Commission announced that the 'Continuous Improvement Consultative Group on Explanation Obligations' has prepared the 'Online Explanation Obligation Guidelines' to ensure that explanations of financial products are reasonably conducted in online sales environments. Currently, some financial companies verify consumers' understanding of financial product explanations together with other consent procedures or implement it through simple (overall) consent methods.

The guidelines structure the screen to allow financial consumers to sufficiently read the explanation screens through skip prevention, button activation after a certain time, and mid-screen checks during explanations. When confirming understanding of financial product explanations, it should be separated from other consent procedures, and when verifying understanding through answerable questions, no specific answers should be induced.

The guidelines also aim to enhance the accessibility and convenience of counseling channels for financial consumers to assist in explaining important matters of financial products in non-face-to-face environments. Measures include placing counseling channels where financial consumers can easily find them and providing customized counseling considering the explanation stages of the products consumers are viewing.

Additionally, easy-to-understand terms should be used for financial consumers, and auxiliary tools such as interest rate and fee calculators, financial glossaries, and basic guides for each financial product should be provided through online sales channels.

Important matters of financial products must be presented clearly so that financial consumers can recognize them. For deposit-type products, interest rates and yields should be explained first; for investment-type products, investment targets, risks associated with investments, risk grades, and fees should be prioritized. It should also be indicated that the information about financial products is an important matter under Article 19 of the Financial Consumer Protection Act's explanation obligation.

Matters that may cause disadvantages to financial consumers and their rights must be prominently emphasized. For example, disadvantages such as penalties for early termination of deposit-type products, interest rate fluctuation possibilities, and other product-type-specific disadvantages, as well as consumer rights such as withdrawal rights and illegal contract termination rights, should be clearly highlighted.

The subscription screen must be designed so that financial consumers can easily understand it. Simply posting or allowing downloads of product brochures considering the screen size of computers or mobile devices is not sufficient to fulfill the explanation obligation. Methods such as including pictures or graphs in the financial product explanation screens or providing supplementary materials can be used.