Financial Services Commission notices amendments to legislation… Implemented in the second half of this year
In the future, financial institutions cannot recommend high-risk products such as private equity funds and high-end products as well as OTC derivatives to general financial consumers.
On the 7th, the Financial Services Commission announced the enactment and supervisory regulations of the Financial Consumer Protection Act (Golden Law) containing these contents.
The amendment to the Enforcement Decree includes content to expand the scope of the ‘prohibition of solicitation of non-invitation’, which prohibits the solicitation of investment products using visits or phone calls unless there is a consumer’s request.
In the past, wide exceptions were allowed in the Enforcement Decree, so it was possible to recommend non-invitation for most investment products except for OTC derivatives.
When the amendment goes into effect, the solicitation of non-invitation without a specific or active request from the consumer will be allowed only if the consumer’s consent is obtained prior to the visit.
Even if consent is obtained, high-end products, private equity funds, and OTC/OTC derivatives should not be recommended to general financial consumers.
However, in the case of professional financial consumers, solicitation is prohibited only for over-the-counter derivatives.
The amendment also includes the application of ‘linked service regulations’ to prepaid and debit cards.
Linked service regulations include the duty to explain linked services and the obligation to notify 6 months in advance when reducing or changing linked services.
Until now, this regulation was applied only to credit cards, resulting in regulatory gains.
In addition, the principle of suitability and adequacy will be applied when purchasing foreign currency insurance, which may incur losses due to exchange rate fluctuations, etc.
The principle that was previously applied only to variable insurance with investment properties will be extended to foreign currency insurance.
According to the suitability principle, the solicitation of financial products that are inappropriate for the consumer’s preferences is prohibited.
In addition, improvements that reflect industry requests are also included.
It includes contents such as improving the existing inconvenience of allowing only the electronic signature method by expanding the electronic method for receiving confirmation from financial consumers.
The FSC plans to implement this amendment to the Enforcement Decree and Supervision Regulations of the Gold Bullion Act in the second half of this year after going through review by the Ministry of Legislation.