The Financial Supervisory Service will simplify warnings on public fund risks and insurance policy terms. On digital risk, it plans to shift from after-the-fact sanctions to a supervision system focused on prevention.
On the 26th, the Financial Supervisory Service (FSS) said it held the second meeting of the Financial Consumer Protection Advisory Committee (the committee) on the 23rd, chaired by Governor Lee Chan-jin, and discussed seven agenda items. The committee, launched last month under the direct supervision of the governor, is the top advisory body on consumer protection. It is tasked with comprehensively reviewing financial supervision and inspection issues and system improvement items from the consumer's perspective.
The meeting was attended by six internal members, including the FSS governor and deputy governors, and 10 external members from consumer and civic groups, academia, the financial industry, and the media. Key discussion topics included strengthening product explanations, responding to digital risks, and improving unfair practices.
First, the way investment risks of public funds are explained will be overhauled. Reflecting criticism that prospectuses do not meet consumers' needs following cases of total losses in overseas real estate funds, the Financial Supervisory Service (FSS) will prepare a "standard for key fund risks." On the first page of the simplified prospectus, it will specify up to four key risks, such as the possibility of principal loss, and the maximum historical loss rate, and it will use plain language and visual materials. To this end, it will run an industry joint task force (TF) in May–June and push to revise disclosure forms.
It will also refine the system for explaining insurance products. Considering that policy terms and product brochures are still difficult and overly information-heavy, the FSS plans to operate a TF composed of a consumer and expert advisory group and an industry working group from this month through July. Proposed measures include simplifying product brochures, visualizing information using infographics and artificial intelligence (AI) chatbots, and refining terminology in policy terms.
Financial practices to protect vulnerable groups will also be improved. Regarding banks' practice of offsetting against the minimum cost of living, the FSS plans to expand the scope of supporting documents and simplify procedures. Although deposits equivalent to the minimum cost of living (2.5 million won) are nonseizable claims and cannot be used to assert setoff, banks have been criticized for proceeding with setoff before confirming the minimum cost of living, so guidance before setoff will be strengthened and a sufficient period for explanation will be provided.
The supervisory framework to respond to changes in the digital financial environment will also shift from a focus on after-the-fact sanctions to a focus on prevention. It plans to make the security awareness and risk management of financial companies, the supervisory methods of the Financial Supervisory Service, and the financial security system all "preventive." In addition, through revision of the Electronic Financial Transactions Act, it will strengthen the responsibilities of the chief executive officer (CEO) and the chief information security officer (CISO), and will also push to introduce a penalty surcharge and information security disclosures.
In addition, it will pursue administrative guidance on processing standards for PG companies' resale of virtual accounts and improve the response system to voice phishing. It also plans to improve unfair financial practices by strengthening identity verification procedures when family members subscribe to financial investment products on behalf of others and by improving the system for designating a proxy claimant for insurance contracts.