Over the past eight years, of the 259,938 financial dispute mediation requests received by the Financial Supervisory Service, only 139 were referred to the dispute mediation committee. The dispute mediation committee is an organization that mediates disputes raised by financial consumers against financial institutions. Its role is to facilitate settlements between the parties to help resolve disputes, but there have been criticisms that it has not been fulfilling this function properly for years.
The government of Lee Jae-myung is promoting the establishment of the Financial Consumer Protection Agency and the introduction of unilateral binding force to strengthen consumer protection and enhance the effectiveness of financial dispute mediation. Once the reorganization of the financial authorities is determined this week, FSS Commissioner Lee Chan-jin, who emphasized "significantly strengthening consumer protection" as his inaugural pledge, is expected to accelerate the introduction of unilateral binding force.
◇ Of the 139 cases, 12% were not established mediation
According to data submitted to Lee In-young of the Democratic Party of Korea by the Financial Supervisory Service on the 26th, the number of financial dispute complaints received last year totaled 42,265. This was the largest since the data collection began in 2017. The complaint numbers increased from 25,205 in 2017 to 32,130 in 2020, and this year marked the first time they surpassed 40,000.
As the revenue structure of financial products becomes more complex and the risk of loss increases, financial dispute complaints are rising every year. However, the cases referred to the dispute mediation committee account for less than 0.1%. Last year, only 14 cases were referred to the committee, representing 0.03% of all financial dispute complaints. Of the 259,938 financial dispute complaints received over the past eight years since 2017, only 0.05%, or 139 cases, were referred to the committee. An FSS official noted, "Similar cases may be collectively processed by presenting representative cases to the committee, so the number of referrals to the committee may be low."
Moreover, not all the dispute mediations established. Among the 139 cases referred to the dispute mediation committee, 17 were not established as financial consumers or financial companies did not accept the mediation proposals. A typical example is the KIKO (currency-linked investment) product's improper sales situation. Financial companies did not accept the committee's compensation mediation proposal, citing legal interpretation differences. The committee's decisions require mediation proposals to be established to have legal settlement effects, but enforcement of mediation is impossible.
◇ Speeding up the introduction of unilateral binding force... Concerns about infringing claim rights
The unilateral binding force system is characterized by enforcing dispute mediation itself. It is a reality that individuals find it difficult to bear significant expenses and time if financial companies do not accept mediation proposals and drag the case into litigation. To address this problem, the key is that if financial consumers accept the committee's mediation proposal for "small" financial disputes, financial companies must accept it without exception. This was a pledge made by President Lee Jae-myung during his presidential campaign, and the Presidential Committee on Policy Planning has selected the introduction of unilateral binding force as a national agenda.
In response to a question about the introduction of unilateral binding force, the Financial Services Commission expressed that it "sympathizes with the intention" and stated, "We plan to prepare detailed introduction plans, such as the standards for small disputes, after gathering opinions from experts and stakeholders." The FSS also stated, "We will actively strive for necessary legislative support for the system's legalization in collaboration with the Financial Services Commission." The FSS opposed the related bill proposed by the Democratic Party during the administration of Yoon Suk-yeol in 2022, arguing that it "could infringe on financial companies' rights to seek legal remedies, which would go against the essence of the mediation system."
Lee In-young stated, "The reality that hundreds of thousands of financial dispute complaints are practically neglected shows the fundamental shortcomings in consumer protection" and added, "The unilateral binding force system is the first step in ensuring that consumers are guaranteed rights on equal footing with financial companies." He said, "Starting from this, we will significantly strengthen the financial consumer protection system at the National Assembly level to create a financial environment where the public can feel secure."
However, there is considerable opposition, with concerns that it infringes on financial companies' rights to file claims and that malicious consumers may exploit it. A source from a major commercial bank remarked, "It is unreasonable that compensation and other dispute resolutions must be accepted unconditionally without an opportunity for rebuttal, and it could be a significant burden from the financial companies' perspective, potentially leading to a substantial contraction in business activities."