The Financial Services Commission said on the 21st that, starting on the 22nd, it will pre-announce legislation for revisions to the Enforcement Decree of the Financial Consumer Protection Act and the Supervisory Regulations on Financial Consumer Protection, which contain detailed standards for imposing a penalty surcharge under the act.
Under the current enforcement decree of the act, a penalty surcharge is calculated based on income, or "income, etc.," derived from contracts related to the violation. Going forward, the standard will be calculated as the "transaction amount" by product type.
For deposit-type products, it will be set as the "deposit amount"; for loan-type products, the "loan amount"; for investment-type products, the "investment amount"; and for insurance-type products, the "earned premium" and amounts equivalent to it. If it is difficult to apply the transaction amount, the supervisory regulations will reflect specific standards to allow calculation by a separate method.
For example, in the case of a violation of the "tying" rule, which forces the sale of a financial product as a condition for a loan, the penalty surcharge is calculated based on the "transaction amount of the other financial product for which the contract was coerced."
The calculation system for the assessment criteria will also be subdivided so that the content and degree of the violation can be reflected. The assessment rate used in current inspection and sanction regulations was divided into three levels by seriousness—50%, 70%, and 100%—and this will be subdivided into 1% or more and less than 30%, 30% or more and less than 65%, and 65% or more and less than 100%.
Cases with greater illegality will face a higher assessment rate, and minor cases with lower illegality will face a lower rate. In addition, when only part of a simple procedural or methodological rule is violated, grounds will be provided to adjust within 50% of the assessment rate.
If the amount of unjust enrichment is larger than the base penalty surcharge, the excess difference will be added. However, if the financial consumer protection evaluation is excellent or internal control standards under the act are faithfully implemented, mitigation of up to 30% and 50%, respectively, will be allowed. Post-violation efforts to recover harm, such as compensating victims or establishing measures to prevent recurrence, can be deducted by up to 50% from the base penalty surcharge.
However, even if two or more grounds are met simultaneously, adjustments are limited to a maximum of 75% of the base penalty surcharge. In addition, a comprehensive consideration will be allowed for the violator's ability to pay, the actual scale of gains obtained, and financial market conditions, and grounds have been established to allow reductions for the portion exceeding 10 times the unjust enrichment.
The Financial Services Commission said, "By presenting specific standards, it will become possible to impose penalty surcharges commensurate with the degree of illegality," adding, "Predictability regarding the standards for imposing penalty surcharges under the act will also be greatly enhanced."