Financial authorities will hold a national report meeting in the second half of this year to assess the implementation of the consumer protection roadmap. This meeting will evaluate the strengthened consumer protection system in the financial sector and the response to financial crimes, prompted by the recent improper sales of Hong Kong H-index linked securities (ELS).
According to the financial sector on July 28, the authorities plan to conduct this consumer protection report meeting in the latter half of the year.
The meeting aims to review the achievements of consumer protection policies initiated last year and to identify additional tasks. The authorities have been enhancing consumer protection management and supervision throughout the entire process of financial product design, sales, and dispute resolution. Although the Financial Consumer Protection Act was enacted in 2021, there has been a perception that consumer-centric management has not been properly established due to the short-term performance-oriented sales practices of financial companies and inadequate internal controls. The 2024 Hong Kong ELS incident also revealed the limitations of governance and internal controls in the financial sector regarding consumer protection.
During this report meeting, the authorities plan to assess the overall implementation of policies and address the limitations that have emerged during the operational process. Discussions involving experts and financial company practitioners are also being considered. Follow-up tasks aimed at further internalizing consumer protection within the governance of financial companies are expected to be presented.
The financial sector has been strengthening its consumer protection system in line with the authorities' policy direction. Major financial groups, including KB, Shinhan, Hana, Woori, and NH, have established internal control committees for consumer protection and created dedicated organizations and executives responsible for consumer protection. They have also introduced a performance evaluation system (KPI) that reflects consumer protection achievements. New guidelines have been developed to clarify the obligation to explain during the sales process of financial investment products.
In this evaluation, the effectiveness of these measures in reducing financial incidents, complaints, and improper sales, as well as in improving internal controls for consumer protection, will be key criteria.
The authorities will also review the performance in responding to financial crimes affecting people's livelihoods, in addition to the entire process of financial product sales. They have focused their policy efforts on eradicating illegal private lending, voice phishing, and insurance fraud. They are also working on introducing a 'no-fault compensation liability system' that would provide up to 50 million won in compensation to voice phishing victims, even if the financial company is not at fault, and temporarily freeze accounts involved in new phishing crimes.
The banking sector has also established dedicated channels for telecommunication financial fraud at all branches and is operating an abnormal transaction detection system (FDS) and an AI-based voice phishing monitoring system (VMS) to prevent damage.
In fact, the number of voice phishing incidents decreased from 2,086 in May of last year to 1,317 in April of this year. During the same period, the amount of damage also dropped from 107.3 billion won to 52.3 billion won.
A financial sector official stated, "Consumer protection has been one of the top priorities of financial policy since the current government took office. This meeting will be an important opportunity to assess the achievements and limitations of the past year."
According to the financial sector on July 28, the authorities plan to conduct this consumer protection report meeting in the latter half of the year.
The meeting aims to review the achievements of consumer protection policies initiated last year and to identify additional tasks. The authorities have been enhancing consumer protection management and supervision throughout the entire process of financial product design, sales, and dispute resolution. Although the Financial Consumer Protection Act was enacted in 2021, there has been a perception that consumer-centric management has not been properly established due to the short-term performance-oriented sales practices of financial companies and inadequate internal controls. The 2024 Hong Kong ELS incident also revealed the limitations of governance and internal controls in the financial sector regarding consumer protection.
During this report meeting, the authorities plan to assess the overall implementation of policies and address the limitations that have emerged during the operational process. Discussions involving experts and financial company practitioners are also being considered. Follow-up tasks aimed at further internalizing consumer protection within the governance of financial companies are expected to be presented.
The financial sector has been strengthening its consumer protection system in line with the authorities' policy direction. Major financial groups, including KB, Shinhan, Hana, Woori, and NH, have established internal control committees for consumer protection and created dedicated organizations and executives responsible for consumer protection. They have also introduced a performance evaluation system (KPI) that reflects consumer protection achievements. New guidelines have been developed to clarify the obligation to explain during the sales process of financial investment products.
In this evaluation, the effectiveness of these measures in reducing financial incidents, complaints, and improper sales, as well as in improving internal controls for consumer protection, will be key criteria.
The authorities will also review the performance in responding to financial crimes affecting people's livelihoods, in addition to the entire process of financial product sales. They have focused their policy efforts on eradicating illegal private lending, voice phishing, and insurance fraud. They are also working on introducing a 'no-fault compensation liability system' that would provide up to 50 million won in compensation to voice phishing victims, even if the financial company is not at fault, and temporarily freeze accounts involved in new phishing crimes.
The banking sector has also established dedicated channels for telecommunication financial fraud at all branches and is operating an abnormal transaction detection system (FDS) and an AI-based voice phishing monitoring system (VMS) to prevent damage.
In fact, the number of voice phishing incidents decreased from 2,086 in May of last year to 1,317 in April of this year. During the same period, the amount of damage also dropped from 107.3 billion won to 52.3 billion won.
A financial sector official stated, "Consumer protection has been one of the top priorities of financial policy since the current government took office. This meeting will be an important opportunity to assess the achievements and limitations of the past year."
* This article has been translated by AI.
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