Protecting financial consumers' rights

By Cho Sung-rae

Director general of the consumer protection department at the Financial Supervisory Service

Cho Sung-rae

Since the 2008 financial crisis, global interest in protecting financial consumers has increased significantly.

This is largely because ordinary citizens, who lack knowledge in financial matters, often put themselves at a disadvantage when dealing with financial services firms. They often suffer losses from transactions involving diverse and complicated financial instruments, especially derivatives such as CDO and CDS which triggered the crisis.

To address this issue, the OECD developed the “G20 High-Level Principles on Financial Consumer Protection” in November 2011, stressing the importance of a responsible supervisory authority in the protection of financial consumers.

And such a crucial role is being played by the Financial Supervisory Service (FSS) in Korea.

In May 2012, the FSS created the Financial Consumer Protection Bureau, set up the relevant committee and held consultative meetings to develop cohesive working relationships between them to focus on consumer protection.

This has further encouraged them to exchange feedback. Additionally, the FSS has been making continuous efforts to address unfair practices in financial transactions and improve relevant systems from the consumers’ perspective.

Financial consumers can also reach the FSS call center at 1332 to lodge complaints if they have suffered damage or inconvenience, with regard to payment of interests, commissions and insurance premiums, from transactions involving a wide range of financial products such as deposits, loans, funds and insurance.

In 2014, the FSS received and addressed nearly 78,000 complaints from consumers. What is more, we are providing free-of-charge consulting services where financial experts advise citizens on debt management, savings and investment, taxes, and retirement in a way that fits their needs and fosters more stable financial life.

Meanwhile, the one-stop service that we provide in conjunction with Seoul Metropolitan government and Chungcheong provincial governments enables individuals to check the entire financial transactions conducted by their decedent when they report his or her death, and the number of such requests processed was roughly 82,000 in 2014.

As part of these efforts, our “Financial Support Bus” visited rural and agricultural areas 87 times to educate and counsel relatively disadvantaged members of our society on financial matters.

Going forward, the FSS will adopt a new system to evaluate financial firms’ consumer risk comprehensively, and establish an integrated disclosure and comparison system for financial products to give more options to consumers. This will help prompt financial companies to enhance their consumer protection abilities voluntarily.

And to foster well-informed consumers, we will set up a comprehensive education management system and make sure that financial education will be incorporated into school curriculum. Also, the financially vulnerable citizens will be given educational services tailored to their needs to be better equipped with financial knowledge. As such, we will do our utmost to prevent consumers from falling victim to financial frauds.

The protection of financial consumers requires not just administering post-damage relief, but also proactively improving relevant systems and practices so that the rights of consumers will not be violated.

Financial consumers should also shift their passive attitude to a more active one in asserting themselves for the sake of consumer sovereignty. To make this easier, the FSS will develop a cohesive framework for communicating and working with financial firms and consumers, consumer organizations and academia.

By doing so, FSS will pay close attention to what they have to say, and try to reflect this in our endeavors to protect consumers in the financial market.

Of course, the most important thing of all is greater interest and input from the public, which is and always will be welcomed by the FSS.