Korean Federation of Community Credit Cooperatives (KFCC) overhauled its systems for selling and advertising financial products, handling complaints, and internal controls to reflect the Financial Consumer Protection Act. KFCC is not currently subject to the act, but it moved preemptively in line with policy direction.
According to the financial industry on the 3rd, Korean Federation of Community Credit Cooperatives (KFCC) recently wrapped up a consulting project on introducing the Financial Consumer Protection Act that it commissioned to YulChon at the end of last year. After six months diagnosing front-line operations, it began follow-up steps, including designating managers for each related department.
The Financial Consumer Protection Act took effect in Mar. 2021 to protect consumer rights during the sale of financial products. It sets out the six sales principles, post-sale withdrawal of subscription, compensation for damages when problems occur, termination of illegal contracts, and dispute resolution systems.
The act currently applies to banks, savings banks, insurers, and card companies, but KFCC is not the Daesang. Whether to apply the act to the mutual finance sector is under discussion in the National Assembly. However, KFCC judged it necessary to build related systems in line with the policy trend of strengthening financial consumer protection and improved its制度.
Korean Federation of Community Credit Cooperatives (KFCC) first prepared financial consumer protection guidelines that include core sales principles such as suitability and appropriateness rules and the duty to explain. For loan screening, it introduced a suitability and appropriateness confirmation form that checks property and credit status and repayment plans so that the borrower's repayment capacity and transaction purpose can be verified.
Product descriptions for mutual aid, deposits, and cards reflect key matters, risk factors, consumer disadvantages, guidance on the right to withdraw a subscription, and the right to terminate illegal contracts. It also prepared an advertising review manual and an internal control checklist to check consumer protection elements from product development through post-sale.
It also improved the internal control system. To check whether consumer protection elements are properly reflected during financial product development, sales, and advertising operations, it prepared internal control review guidelines and checklists, and introduced procedures for prior consultation, post reviews, and corrective actions.
An official at Korean Federation of Community Credit Cooperatives (KFCC) said, "We judged it more important to check and improve necessary areas in advance rather than respond after the制度 was implemented," adding, "We will work to enhance financial consumers' rights and trust."