ACT ON THE PROTECTION OF FINANCIAL CONSUMERS

영문법령 불러오는 중…

ACT ON THE PROTECTION OF FINANCIAL CONSUMERS — 법갈피

Article 4(Classification of financial companies and other relevant persons by type of business) #

Financial companies and other relevant persons shall be classified into financial product direct sellers, financial product distribution agents or brokers, or financial product advisors under this Act as follows; provided, if a financial company or other relevant person referred to in any of the following subparagraphs concurrently operates a financial product distribution business or a financial product advisory business not mentioned in the relevant subparagraph (referring to a financial product distribution business or a financial product advisory business; hereinafter the same shall apply) under any other statute, such financial company or other relevant person shall be deemed to be also a financial product distributor or advisor for the concurrently operated business:

1. A bank under the Banking Act: A financial product direct seller or a financial product distribution agent or broker;

2. An investment trader under the Financial Investment Services and Capital Markets Act: A financial product direct seller or a financial product distribution agent or broker;

3. An investment broker under the Financial Investment Services and Capital Markets Act: A financial product direct seller or a financial product distribution agent or broker;

4. An investment advisory business entity under the Financial Investment Services and Capital Markets Act: A financial product advisor;

5. A discretionary investment business entity under the Financial Investment Services and Capital Markets Act: A financial product direct seller;

6. A trust business entity under the Financial Investment Services and Capital Markets Act: A financial product direct seller or a financial product distribution agent or broker;

7. A merchant bank under the Financial Investment Services and Capital Markets Act: A financial product direct seller or a financial product distribution agent or broker;

8. An investment solicitor under the Financial Investment Services and Capital Markets Act: A financial product distribution agent or broker;

9. An insurance company under the Financial Investment Services and Capital Markets Act: A financial product direct seller or a financial product distribution agent or broker;

10. An insurance solicitor under the Insurance Business Act: A financial product distribution agent or broker;

11. An insurance agency under the Insurance Business Act: A financial product distribution agent or broker;

12. A certified insurance broker under the Insurance Business Act: A financial product distribution agent or broker;

13. A mutual bank under the Mutual Savings Banks Act: A 　 financial product direct seller or a financial product distribution agent or broker;

14. A specialized credit financial business company under the Specialized Credit Finance Business Act or a concurrent loan service provider under that Act: A financial product direct seller or a financial product distribution agent or broker;

15. A solicitor under the Specialized Credit Finance Business Act: A financial product distribution agent or broker;

16. A financial company or other relevant person under subparagraph 7h of Article 2: A financial product distributor or advisor prescribed by Presidential Decree.

Article 12(Registration of financial product distributors and advisors) #

(1) A person who intends to operate a financial product distribution business or a financial product advisory business shall determine the scope of the financial products with which the person intends to deal, among deposit products, loan products, investment products, and indemnity products classified under Article 3, as a financial product direct seller, a financial product distribution agent or broker, or a financial product advisor, and shall register with the Financial Services Commission; provided, in any of the following cases a person may operate a financial product distribution business or a financial product advisory business without registration:

1. Where a finance-related statute requires to obtain authorization, permission, or registration for business lines falling within the category of a financial product distribution business or a financial product advisory business;

2. Where a finance-related statute requires to engage in business lines falling within the category of a financial product distribution business or a financial product advisory business without authorization, permission, or registration under the relevant statute.

(2) A person who intends to file for registration of a financial product direct seller or a financial product advisor under paragraph (1) shall meet all the following requirements; provided, the requirement of subparagraph 6 shall not apply to financial product direct sellers: <Amended on Dec. 29, 2020>

1. Such person shall be equipped with the human resources, computer systems, and other physical facilities prescribed by Presidential Decree so as to be capable of protecting financial consumers and conducting business activities;

2. Such person shall have an equity capital not less than the amount prescribed by Presidential Decree for each type of business to register under paragraph (1);

3. Such person shall have good financial standing and social credibility prescribed by Presidential Decree;

4. Such person shall have no executive officer falling under any item of paragraph (4)1;

5. Such person shall have a system for preventing conflicts of interest with financial consumers, which shall meet the requirements prescribed by Presidential Decree;

6. Such person shall have no interest in any financial product distributor and shall meet the following requirements:

a. Such person shall not concurrently operate a financial product distribution business (excluding the discretionary investment business under Article 6(8) of the Financial Investment Services and Capital Markets Act) and any other financial business prescribed by Presidential Decree;

b. Such person shall not be an affiliate defined in subparagraph 12 of Article 2 of the Monopoly Regulation and Fair Trade Act of, or a company having a relationship prescribed by Presidential Decree with, a financial product distributor (excluding discretionary investment business entities defined in Article 8(6) of the Financial Investment Services and Capital Markets Act; hereafter in this paragraph the same shall apply) (hereinafter referred to as "affiliate, etc.");

c. Such person shall have no executive officer or employee who concurrently holds a position as an executive officer or employee of any financial product distributor or who is seconded by any financial product distributor;

d. Other requirements prescribed by Presidential Decree to prevent conflicts of interest with financial consumers.

(3) A person who intends to register as a financial product distribution agent or broker under paragraph (1) shall meet all the following requirements:

1. Such person shall have the qualifications prescribed by Presidential Decree, including the completion of educational programs;

2. Such person shall not fall under any item of paragraph (4)2 (in cases of a corporation that intends to register as a financial product distribution agent or broker, any of its executive officers shall not fall under any item of paragraph (4)2);

3. Such persons shall meet the requirements prescribed by Presidential Decree concerning the standards for the conduct of business activities of financial product distribution agents and brokers, the possession of necessary human resources, etc. as matters necessary for the protection of rights and interests of financial consumers and the sound trading practices.

(4) A person falling under any item of the relevant subparagraph, among the following subparagraphs, shall not become a financial product direct seller, a financial product advisor, or an executive officer of a corporate financial product distribution agent and broker who is registered under paragraph (1):

1. In cases of a financial product direct seller or a financial product advisor:

a. A minor, a person under adult guardianship, or a person under limited guardianship;

b. A person declared bankrupt and not yet reinstated;

c. A person in whose case five years have not passed since his or her imprisonment without labor or greater punishment sentenced by a court was completely executed or he or she was discharged from such imprisonment (including cases where the execution of such sentence is deemed to have been completed);

d. A person who is under suspension of the execution of imprisonment without labor or greater punishment sentenced to him or her by a court;

e. A person in whose case five years have not passed since the complete execution of, or the discharge from, a sentence of a fine or greater punishment to him or her for a violation of this Act, a finance-related statute prescribed by Presidential Decree, or a finance-related statute of a foreign country (including cases where such sentence is deemed to have been completely executed);

f. A person in whose case the period prescribed by Presidential Decree within a maximum of five years for each type of sanction has not passed since a sanction was imposed upon him or her under this Act or a finance-related statute prescribed by Presidential Decree (in cases of a retired or resigned executive officer, including notification equivalent to such sanction);

g. A person prescribed by Presidential Decree as a person who is likely to undermine the protection of financial consumers and the sound trading practices;

2. In cases of a corporate financial product distribution agent or broker:

a. A person falling under subparagraph 1a, b, or d;

b. A person in whose case two years have not passed since his or her imprisonment without labor or greater punishment sentenced by a court was completely executed or he or she was discharged from such imprisonment (including cases where the execution of such sentence is deemed to have been completed);

c. A person in whose case two years have not passed since the complete execution of, or the discharge from, a sentence of a fine or greater punishment to him or her for a violation of this Act, a finance-related statute prescribed by Presidential Decree, or a finance-related statute of a foreign country (including cases where such sentence is deemed to have been completely executed).

(5) A person who intends to register as a financial product distributor or advisor under paragraph (1) shall pay fess prescribed by Presidential Decree in consideration of necessary expenses for the examination and management of requirements for registration.

(6) Except as provided in paragraphs (1) through (5), matters necessary for the registration of financial product distributors and advisors shall be prescribed by Presidential Decree.

Article 17(Principle of suitability) #

(1) In executing a contract for a financial product, conducting other relevant transactions, or providing advisory service, financial product distributors and advisors shall ascertain whether a counterparty financial consumer is an ordinary financial consumer or a professional financial consumer.

(2) When a financial product distributor or advisor solicits an ordinary financial consumer to conclude a contract for a financial product referred to in any of the following subparagraphs (including cases where a financial product advisor provides advisory service; hereafter the same shall apply in this Article), the financial product distributor or advisor shall obtain the information required under the relevant subparagraph through interviews, inquiries, etc. by requesting the ordinary financial consumer to affix his or her signature (including the digital signature defined in subparagraph 2 of Article 2 of the Digital Signature Act; hereinafter the same shall apply) or to print his or her name and affix his or her seal, by tape-recording oral statements of the ordinary financial consumer, or by obtaining confirmation from the ordinary financial consumer by other methods prescribed by Presidential Decree, shall maintain and manage such information appropriately, and shall provide the confirmed information to the ordinary financial consumer, without delay:

1. An indemnity product prescribed by Presidential Decree, including variable indemnity products under Article 108(1)3 of the Insurance Business Act:

a. The age of the ordinary financial consumer;

b. The status of property (referring to information about assets and income, including debts; hereinafter the same shall apply);

c. The purpose of conclusion of a contract for the indemnity product;

2. An investment product (excluding the investment products prescribed by Presidential Decree, such as securities subject to the crowdfunding brokerage under Article 9(27) of the Financial Investment Services and Capital Markets Act; hereafter the same shall apply in this Article) or a deposit product prescribed by Presidential Decree as a financial product with a rate of return variable according to the performance of investment:

a. The purpose of acquisition or disposal of the relevant financial product by the ordinary financial consumer;

b. The status of property;

c. Experiences in acquisition or disposal;

3. A loan product:

a. The status of property of the ordinary financial consumer;

b. Credit and the repayment plan;

4. Other information prescribed by Presidential Decree as necessary for soliciting ordinary financial consumers to conclude a contract for financial products suitable to ordinary financial consumers.

(3) No financial product distributor or advisor shall solicit an ordinary financial consumer to conclude a contract considered unsuitable to the ordinary financial consumer in light of the information referred to in the relevant subparagraph of paragraph (2). The criteria for the determination on suitability in such cases shall be prescribed by Presidential Decree in accordance with the relevant subparagraph of paragraph (2).

(4) Further details of the information that financial product distributors and advisors shall obtain for each type of financial product under paragraph (2) shall be prescribed by Presidential Decree.

(5) Paragraphs (1) through (3) shall not apply where a financial product distributor or advisor sells collective investment securities of a hedge fund under Article 249-2 of the Financial Investment Services and Capital Markets Act; provided, the same shall not apply where a person prescribed by Presidential Decree, such as an ordinary financial consumer, among qualified investors under Article 249-2 of that Act, requests in accordance with Presidential Decree.

(6) Financial product distributors and advisors under paragraph (5) shall inform the persons prescribed by Presidential Decree, in advance, in accordance with Presidential Decree, that they may separately request the application of paragraphs (1) through (3) under the proviso of paragraph (5).

Article 18(Principle of appropriateness) #

(1) When a financial product distributor intends to conclude a contract for a financial product with an ordinary financial consumer without soliciting the ordinary financial consumer to conclude a contract for an indemnity product, an investment product, or a loan product specified respectively by Presidential Decree, such financial product distributor shall obtain the information required in the relevant subparagraph, among the following subparagraphs, through prior interviews, inquiries, etc.:

1. Indemnity products: Information referred to in Article 17(2)1;

2. Investment products: Information referred to in Article 17(2)2;

3. Loan products: Information referred to in Article 17(2)3;

4. Information prescribed by Presidential Decree as considered necessary for financial product distributors to determine whether a contract for the sale of a financial product is appropriate to an ordinary financial consumer.

(2) If a financial product distributor determines that the financial product concerned is not appropriate for an ordinary financial consumer in light of the information identified in accordance with the relevant subparagraph of paragraph (1), the financial product distributor shall notify the ordinary financial consumer of the fact in accordance with Presidential Decree and shall obtain confirmation on the notification by requesting the ordinary financial consumer to affix his or her signature or print his or her name and affix his or her seal, by tape-recording oral statements of the ordinary financial consumer, or by obtaining confirmation from the ordinary financial consumer by other methods prescribed by Presidential Decree. The criteria for the determination on appropriateness shall be prescribed by Presidential Decree for the products referred to in each subparagraph of paragraph (1).

(3) Further details of the information that financial product distributors shall obtain for each type of financial product under paragraph (1) shall be prescribed by Presidential Decree.

(4) Paragraphs (1) and (2) shall not apply where a financial product distributor sells collective investment securities of a hedge fund under Article 249-2 of the Financial Investment Services and Capital Markets Act; provided, the same shall not apply where a person prescribed by Presidential Decree, such as an ordinary financial consumer, among qualified investors under Article 249-2 of that Act, requests in accordance with Presidential Decree.

(5) Financial product distributors under paragraph (4) shall inform the persons prescribed by Presidential Decree, in advance, in accordance with Presidential Decree, that they may separately request the application of paragraphs (1) and (2) under the proviso of paragraph (4).

Article 19(Obligation to explain) #

(1) When a financial product distributor or advisor solicits an ordinary financial consumer to conclude a contract (including cases where a financial product advisor provides advisory service) or when an ordinary financial consumer requests explanation, the financial product distributor or advisor shall explain important matters concerning financial products referred to in any of the following subparagraphs (limited to relevant matters if an ordinary financial consumer wants explanation about particular matters) to the ordinary financial consumer in a manner that the ordinary financial consumer can understand:

1. Matters concerning products referred to in each of the following items:

a. Indemnity Products:

1) Description of an indemnity product;

2) Insurance premium (including mutual aid premium; hereinafter the same shall apply);

3) Grounds for restriction on the payment of insurance claims (including mutual aid claims; hereinafter the same shall apply) and the procedure for payment;

4) The scope of risk coverage;

5) Other matters prescribed by Presidential Decree as important for indemnity products, such as the term of risk coverage;

b. Investment products:

1) Description of an investment product;

2) Risks of investment;

3) In cases of the investment products prescribed by Presidential Decree, the risk rating determined by a financial product direct seller in accordance with standards prescribed by Presidential Decree;

4) Other matters prescribed by Presidential Decree as important for investment products, including fees to be paid by financial consumers;

c. Deposit products:

1) Description of a deposit product;

2) Other matters prescribed by Presidential Decree as important for deposit products, such as interest rate, rate of return, etc.;

d. Loan products:

1) Description of a loan product, such as the interest rate, whether the interest rate is variable or not, whether an early repayment charge (referring to the fee imposed when a financial consumer fully or partially repays a loan before the maturity of the loan; hereinafter the same shall apply) is to be imposed or not, the term of the loan, and fee rates;

2) The amount of repayment and the interest rate and timing for repayment, depending upon the method of repayment;

3) Matters concerning the creation of mortgages and other security rights, the ground for execution of security rights, and matters concerning changes in rights, such as the forfeiture of the title to collateral by exercising a security right;

4) The total amount, including the loan principle and fees, to be borne by financial consumers when concluding a loan agreement;

5) Other matters prescribed by Presidential Decree for loan products, including matters concerning the termination of loan agreements;

2. Where a financial product or service is linked or tied with a financial product under the items of subparagraph 1 (hereinafter referred to as "linked or tied product or service, etc."), the following matters:

a. Description of the linked or tied product or service, etc.;

b. Matters concerning responsibility for the performance of the linked or tied product or service, etc.;

c. Other matters prescribed by Presidential Decree as important for linked or tied products or services, etc. such as the period of provision of a linked or tied product or service, etc.;

3. Matters concerning the deadline for the withdrawal of an offer under Article 46, the method and effect of exercise of such right;

4. Other matters prescribed by Presidential Decree for the protection of financial consumers.

(2) A financial product distributor or advisor shall provide a written explanation necessary for the explanation under paragraph (1) to each ordinary financial consumer and shall obtain confirmation that the ordinary financial consumer understands the explanation by requesting the ordinary financial consumer to affix his or her signature or print his or her name and affix his or her seal, by tape-recording oral statements of the ordinary financial consumer, or by other methods prescribed by Presidential Decree; provided, in cases prescribed by Presidential Decree as those where the protection of financial consumers and the robust trading system are unlikely to be undermined, such written explanation need not be provided.

(3) In providing the explanation under paragraph (1), no financial product distributor or advisor shall falsify or misrepresent (referring to an act of providing conclusive judgment on any uncertain matter or providing misleading information) any matter prescribed by Presidential Decree as likely to seriously affect reasonable judgment of ordinary financial consumers or the value of a financial product or omit any important matter prescribed by Presidential Decree.

(4) Further details about the contents of a written explanation under paragraph (2) and the methods and procedure for providing such written explanation shall be prescribed by Presidential Decree.

Article 20(Prohibition of unfair business activities) #

(1) No financial product distributor or advisor shall commit any of the following acts (hereinafter referred to as "unfair business activities"), which violates rights and interests of financial consumers, taking advantage of his or her dominant position:

1. Forcing a financial consumer to conclude a contract for a financial product contrary to the financial consumer’s intention in the context of concluding a contract for a loan product or any other financial product prescribed by Presidential Decree;

2. Unfairly requiring a financial consumer to offer an asset as security or a guarantee in the context of concluding a contract for a loan product or any other financial product prescribed by Presidential Decree;

3. Demanding or receiving any benefit by a financial product distributor or advisor or any of its executive officers and employees in connection with its business activities;

4. In cases of a loan product, any of the following acts:

a. Forcing a financial consumer to choose a particular method for the repayment of a loan for its own benefit or for a third party’s benefit;

b. Except the cases referred to in 1) through 3) below, imposing any fee, penalty, or early repayment charge, in whatsoever name;

1) Where a loan is repaid within three years from the date of execution of the loan agreement;

2) Where imposing an early repayment charge is allowed under any other statute or regulation;

3) Other acts prescribed by Presidential Decree as unlikely to undermine the protection of financial consumers and the robust trading system;

c. Demanding a third party’s joint surety in connection with a contract for a loan product prescribed by Presidential Decree, such as a loan to an individual;

5. If a linked or tied product or service, etc. is involved, an act prescribed by Presidential Decree as an act of unfairly reducing or changing such linked or tied product or service, etc.; provided, the cases where, although a linked or tied product or service, etc. is inevitably reduced or changed, another linked or tied product or service, etc., equivalent to such product or service, is provided instead or where it is inevitable to reduce or change a linked or tied product or service, etc. due to the suspension of business activities, bankruptcy, or a crisis of management of a financial product distributor or advisor, shall be excluded;

6. Any other act of violating a financial consumer’s rights and interests by a financial product distributor or advisor, taking advantage of its dominant position.

(2) Specific types of, or the criteria for, unfair business activities shall be prescribed by Presidential Decree.

Article 21(Prohibition of unfair solicitation) #

No financial product distributor or advisor shall commit any of the following acts in soliciting the conclusion of a contract (including cases where a financial product advisor provides advisory service; hereafter the same shall apply in this Article); provided, the acts prescribed by Presidential Decree as unlikely to undermine the protection of financial consumers and the robust trading system shall be excluded:

1. Providing conclusive judgment on any uncertain matter or giving any misleading information;

2. Misrepresenting the description of a financial product;

3. Knowingly omitting to inform a financial consumer of any matter seriously affecting the value of a financial product;

4. Representing that the financial product concerned is better or more advantageous than other financial products with regard to part of the description of the financial product, without specifying compared products and criteria or with no objective ground;

5. In cases of an indemnity product, any of the following acts:

a. Hindering a financial consumer (including interested persons prescribed by Presidential Decree; hereafter the same shall apply in this subparagraph) from notifying a financial product direct seller of any important matter concerning a contract for an indemnity product or soliciting a financial consumer to refrain from information such important matter;

b. Soliciting a financial consumer to provide a financial product direct seller with inadequate information about any important matter concerning a contract for an indemnity product;

6. In cases of an investment product, any of the following acts:

a. Using a method for real-time conversation, such as a visit in person or telephone, without receiving any request from a financial consumer to solicit the conclusion of a contract;

b. Continuing to solicit the conclusion of a contract even after the financial consumer solicited to conclude such contract has already expressed his or her refusal to the solicitation;

7. Other acts prescribed by Presidential Decree as likely to undermine the protection of financial consumers or the robust trading system.

Article 22(Obligations relating to advertisements of financial products) #

(1) Neither a person who is not a financial product distributor or advisor nor a financial product distributor or advisor prescribed by Presidential Decree, such as a financial product distribution agent or broker dealing with investment products, shall make an advertisement of any business line of financial product distributors and advisors or of any financial product (hereinafter referred to as "advertisement of a financial product or other matter"); provided, a person prescribed by Presidential Decree, such as an institution falling under any of the following subparagraphs (hereinafter referred to as "relevant association or institution") or a financial holding company that is not a financial product distributor or advisor but has a financial product distributor or advisor as its subsidiary or second-tier subsidiary, may make an advertisement of a financial product or other matter:

1. The Korea Financial Investment Association established pursuant to Article 283 of the Financial Investment Services and Capital Markets Act;

2. The association composed of life insurance companies, among insurance associations established pursuant to Article 175 of the Insurance Business Act;

3. The association composed of non-life insurance companies, among insurance associations established pursuant to Article 175 of the Insurance Business Act;

4. The Korea Federation of Savings Banks established pursuant to Article 25 of the Mutual Savings Bank Act;

5. The Credit Finance Association established pursuant to Article 62 of the Specialized Credit Finance Business Act;

6. Other institutions prescribed by Presidential Decree as similar to those referred to in subparagraphs 1 through 5.

(2) When a financial product distributor or advisor (including the persons falling under the proviso of paragraph (1); hereafter the same shall apply in this Article) makes an advertisement of a financial product or other matter, it shall communicate the description of the financial product clearly and fairly so as to avoid misleading information.

(3) An advertisement of a financial product or other matter by a financial product distributor or advisor shall include the following contents; provided, the same shall not apply to advertisements of an investment product under the main clause of Article 17(5):

1. A statement of recommending the reading of the written explanation and terms and conditions of the contract for the financial product concerned before concluding the contract for the financial product;

2. The name of the financial product distributor or advisor and the description of the financial product;

3. The following information:

a. In cases of an indemnity product: The statement that if a financial consumer terminates an existing contract and concludes another contract, the conclusion of the contract may be denied, the expenses payable by the financial consumer, such as insurance premium, (hereafter referred to as "insurance premium, etc." in this Article) may be increased, or the coverage may be changed;

b. In cases of an investment product:

1) Risks on investment;

2) When making an advertisement including the past performance of operation, the statement that past investment performance is not indicative of future returns;

c. In cases of a deposit product: In illustrating the amount payable at maturity, etc. in an advertisement, the statement that the amount payable at maturity, etc. illustrated in the advertisement does not guarantee future profit (limited to financial products prescribed by Presidential Decree as deposit products for which the amount payable at maturity is variable);

d. In cases of a loan product: Terms and conditions of the loan;

4. Other information prescribed by Presidential Decree for the protection of financial consumers.

(4) No financial product distributor or advisor shall commit any of the following acts in making an advertisement of a financial product or other matter:

1. In cases of an indemnity product:

a. Misleading financial consumers into believing that they are entitled to indemnity without limitations by omitting coverage limits, terms and conditions of restriction on indemnity, exclusions, or grounds for reducing payments or by notifying such information inadequately;

b. Misleading financial consumers into believing that coverage is greater by emphasizing a particular term or condition or by introducing a case for which a great amount of insurance proceeds is guaranteed;

c. Misleading financial consumers into believing that insurance premium, etc. are inexpensive by expressing insurance premium on a daily basis or by insufficiently explaining the standards for the calculation of insurance premium;

d. In cases of an indemnity product automatically renewed at maturity, failing to notify financial consumers sufficiently enough for them to recognize that insurance premium, etc. may be increased at the time of renewal;

e. In cases of an indemnity product for which the amount refundable at maturity is variable according to interest rate and the performance of investment, acts prescribed by Presidential Decree for the protection of financial consumers, such as misleading financial consumers to believe that a definite amount of the refund at maturity will be paid at the maturity of the indemnity product;

2. In cases of investment products:

a. Misleading financial consumers to believe that losses are compensated or profits are guaranteed; provided, the cases prescribed by Presidential Decree as those where financial consumers are unlikely to be misled shall be excluded;

b. Using in an advertisement any matter other than the matters prescribed by Presidential Decree in consideration of the nature of the investment product concerned with regard to the investment products prescribed by Presidential Decree;

c. Acts prescribed by Presidential Decree for the protection of financial consumers, such as an act of indicating the rate of return or the performance of operation only for a period in which the rate of return or the performance of operation was better, in indicating a rate of return or the performance of operation;

3. In cases of a deposit product:

a. Misleading financial consumers by failing to clearly indicate the range of interest rates, the method of calculation of interest rates, the timing for the payment and imposition of interest, and incidental benefits and expenses;

b. Acts prescribed by Presidential Decree for the protection of financial consumers, such as an act of indicating the rate of return or the performance of operation only for a period in which the rate of return or the performance of operation was better, in indicating a rate of return or the performance of operation;

4. A loan product:

a. Misleading financial consumers by failing to clearly indicate the range of interest rates for the loan, the method of calculation of interest rates, the timing for the payment and imposition of interest on the loan, and incidental benefits and expenses;

b. Misleading financial consumers to believe that the interest rate for the loan is lower by expressing the interest on the loan on a daily basis.

(5) If an advertisement of a financial product or other matter includes any matter labeled or advertised under Article 4(1) of the Act on Fair Labeling and Advertising, that Act shall apply to such advertisement or matter.

(6) A relevant association or institution may check whether a financial product distributor or advisor observes the standards for advertisement under paragraphs (1) through (4) in accordance with Presidential Decree with regard to advertisements of financial products and other matters of the financial product distributor or advisor and may notify the relevant financial product distributor or advisor of its opinion on findings from its checking.

(7) Further details concerning paragraphs (2) through (4) and the method and procedure for advertising shall be prescribed by Presidential Decree.

Article 27(Rules on business activities of financial product advisors) #

(1) Financial product advisors shall exercise due care as a good manager in providing advisory service to financial consumers.

(2) Financial product advisors shall perform advisory service earnestly in order to protect interests of financial consumers.

(3) A financial product advisor shall inform financial consumers of the following matters in the course of performing advisory service and shall post a mark indicating that they are financial product advisors or present the relevant certificate to financial consumers:

1. Whether the financial product advisor is a person who meets the requirements under the items of Article 12(2)6 (hereinafter referred to as "independent financial product advisor");

2. If the financial product advisor receives property interest in relation to advisory service from financial product distributors, the kinds and size of such property interest; provided, minor property interest prescribed by Presidential Decree shall be excluded;

3. If the financial product advisor concurrently operates a financial product distribution business, the name of the financial product distributor who has the relationship of entrustment of business transactions, including the conclusion of contracts for financial products and other relevant transactions, with the financial product advisor and the details of entrustment;

4. The scope of financial products on which advisory service is provided;

5. The procedure for the provision of advisory service;

6. Other matters prescribed by Presidential Decree for the protection of rights and interests of financial consumers or the robust trading system.

(4) No person, except independent financial product advisors, may use the characters with the meaning "independent" or the foreign language characters prescribed by Presidential Decree as those having the same meaning (hereinafter referred to as "characters with the meaning of ‘independent’") in names or advertisements.

(5) No independent financial product advisor shall commit any of the following acts:

1. Receiving any economic benefit from a financial product distributor (including its executive officers and employees) in relation to a response to a financial consumer’s request for advisory service; provided, the cases prescribed by Presidential Decree such as those where an independent financial product advisor receives fees for advisory service provided to financial product distributors;

2. Other acts prescribed by Presidential Decree as those that can cause a conflict of interest with a financial consumer.

Article 28(Keeping, maintenance, and management of records) #

(1) Every financial product distributor or advisor shall keep records of the information prescribed by Presidential Decree about business activities of the financial product distribution business or the financial product advisory business and shall maintain and manage such records for the period prescribed by Presidential Decree for each type of information.

(2) Every financial product distributor or advisor shall establish and implement measures appropriate for preventing the records that shall be kept, maintained, and managed under paragraph (1) from being destroyed, falsified, or altered.

(3) A financial consumer may request a financial product distributor or advisor to allow him or her to inspect (including provision of copies, hearings; hereafter the same shall apply in this Article) the records that shall be kept, maintained, and managed by the financial product distributor or advisor under paragraph (1), for the purpose of seeking remedies for his or her rights, including mediation in a dispute or litigation under Article 36.

(4) Upon the receipt of a financial consumer’s request for inspection under paragraph (3), a financial product distributor or advisor shall allow the financial consumer to inspect relevant records within the period prescribed by Presidential Decree for each type of information within a maximum of 10 days from the date the financial product distributor or advisor receives such request. If it is impracticable to allow inspection within such period due to good cause in such cases, the financial product distributor or advisor may notify the financial consumer of such cause and postpone inspection but shall allow the financial consumer to inspect the relevant records, without delay, when such cause ceases to exist.

(5) In any of the following cases, a financial product distributor or advisor may restrict inspection or refuse to allow inspection by notifying the financial consumer concerned of the ground for such restriction or refusal:

1. Where a financial product distributor or advisor may restrict inspection or may refuse to allow inspection under a statute or regulation;

2. Where inspection is likely to be harmful to the life or body of any other person or is likely to unfairly violate property or an interest of any other person;

3. Other cases prescribed by Presidential Decree as those where it is inappropriate to allow inspection because inspection is likely to seriously infringe trade secret (referring to trade secret defined in subparagraph 2 of Article 2 of the Unfair Competition Prevention and Trade Secret Protection Act) of the financial company concerned.

(6) When a financial consumer requests a financial product distributor or advisor to allow inspection, the financial product distributor or advisor may charge fees and postal charges (applicable only where mailing copies is requested) in accordance with Presidential Decree.

(7) Special terms and conditions in contravention of paragraphs (3) and (4) shall be void and null, if they are unfavorable to ordinary financial consumers. <Added on Jul. 11, 2023>

(8) Matters necessary for the methods and procedures for the requesting of, the restriction on, and the notification of, inspection under paragraphs (3) through (5) shall be prescribed by Presidential Decree. <Amended on Jul. 11, 2023>

Article 34(Composition of Mediation Committee) #

(1) The Committee for the Mediation of Financial Disputes under Article 33 (hereinafter referred to as the "Mediation Committee") shall be composed of not more than 35 members, including one Chairperson.

(2) The Chairperson of the Mediation Committee shall be appointed by the Governor of the Financial Supervisory Service, from among senior deputy governors of the Financial Supervisory Service.

(3) Members of the Financial Supervisory Service shall be appointed by the Governor of the Financial Supervisory Service, from among deputy governors of the Financial Supervisory Service, and commissioned by the Governor of the Financial Supervisory Service, from among persons falling under any of the following subparagraphs, taking gender equality into consideration:

1. A judge, a public prosecutor, or a licensed attorney-at-law;

2. A person who serves or served as an executive officer of the Korea Consumer Agency under the Framework Act on Consumers or a consumer organization registered under that Act or a person who has worked for not less than 15 years for such institution or organization;

3. A person who has worked for not less than 15 years for an institution subject to mediation or a finance-related institution or organization;

4. A person who has knowledge and experiences in the field of finance or consumers;

5. A medical doctor with a specialist license;

6. Other persons who the Governor of the Financial Supervisory Service considers necessary for the mediation of disputes.

(4) The term of office of committee members under each subparagraph of paragraph (3) shall be two years.

(5) If the Chairperson of the Mediation Committee is unable to perform his or her duties due to any unavoidable cause, the member of the Mediation Committee designated by the Governor of the Financial Supervisory Service shall act on behalf of the Chairperson.

(6) For the purpose of applying Articles 129 through 132 of the Criminal Act, members who are not public officials, among members of the Mediation Committee, shall be deemed public officials.

Article 36(Mediation of disputes) #

(1) When a dispute arises in connection with finance, an institution subject to mediation, a financial consumer, or other interested person may apply for the mediation of the dispute to the Governor of the Financial Supervisory Service.

(2) Upon the receipt of an application for the mediation of a dispute under paragraph (1), the Governor of the Financial Supervisory Service may notify relevant parties of the issues of the application and may recommend settlement by agreement to them; provided, if the issues of the application fall under any of the following subparagraphs, it does not need to recommend settlement by agreement or refer the dispute to the Mediation Committee under paragraph (4):

1. If the Governor of the Financial Supervisory Service finds that the issues of the application is not appropriate to settle by mediation;

2. If the issues of the application have no practical merit in proceeding with recommendation of settlement by agreement or mediation, in light of objective evidence, etc.;

3. Other cases prescribed by Presidential Decree as similar to those referred to in subparagraph 1 or 2.

(3) When the Governor of the Financial Supervisory Service does not recommend settlement by agreement or refer a dispute to the Mediation Committee under the proviso, with the exception of the subparagraphs, of paragraph (2), he or she shall notify the involved parties of the fact in writing.

(4) When a dispute is not settled by agreement under the main clause, with the exception of the subparagraphs, of paragraph (2) within 30 days from the filing date of an application for the mediation of a dispute, the Governor of the Financial Supervisory Service shall refer the dispute to the Mediation Committee, without delay.

(5) When a dispute is referred to the Mediation Committee for mediation under paragraph (4), the Mediation Committee shall deliberate on the dispute and prepare a draft mediation agreement within 60 days.

(6) When the Mediation Committee completes a draft mediation agreement, the Governor of the Financial Supervisory Service may propose the draft mediation agreement to the applicant and involved parties to recommend them to accept it.

(7) If the applicant and involved parties do not accept a draft mediation agreement within 20 days from the date the draft mediation agreement is proposed to them under paragraph (6), the draft mediation agreement shall be deemed not accepted.

Article 38(Disqualification of, challenge to, and refrainment by, members) #

(1) In any of the following cases, a member of the Mediation Committee shall be barred from deliberation and resolution on the relevant application for the mediation of a dispute (hereinafter referred to as "relevant case"):

1. If the committee member or the current or former spouse of the committee member becomes a party to the relevant case (if the party is a corporation, organization or other similar entity, including its executive officers; hereafter the same shall apply in this subparagraph and subparagraph 2) or is a joint right holder or joint obligor with a party to the relevant case;

2. If the committee member is a current or former relative of a party to the relevant case;

3. If the committee member belongs or belonged to a corporation or an organization (including affiliates, etc.; hereafter the same shall apply in this paragraph) during the latest five years before the filing date of the mediation application;

4. If the committee member of the corporation, organization, or office to which the committee member belongs has testified, provided legal advice, appraised damage, or provided similar services with respect to the relevant case;

5. If the committee member or the corporation, organization, or office to which the committee member belongs is or was involved in the relevant case as the representative of a party.

(2) If a party reasonably suspects that a committee member will be partial in the proceedings of deliberation and resolution, the party may file a challenge against the committee member to the Chairperson of the Mediation Committee; and the Chairperson of the Mediation Committee shall determine to accept the challenge if he or she finds that the challenge is reasonable.

(3) If a committee member is to be disqualified under any subparagraph of paragraph (1), he or she shall voluntarily refrain from participating in the proceedings of deliberation and resolution on the relevant case.

Article 46(Withdrawal of offer) #

(1) An ordinary financial consumer who has offered a contract for an indemnity product, an investment product, or a loan product prescribed by Presidential Decree or for advisory service on financial products with a financial product distributor or advisor may withdraw such offer within the relevant period specified in the following subparagraphs (if the parties to a transaction have agreed on a period longer than the period specified in the relevant subparagraph, such longer period):

1. In cases of an indemnity product: 15 days from the date on which an insurance policy under Article 640 of the Commercial Act is delivered or 30 days from the date of the offer, whichever comes earlier;

2. In cases of an investment product or advisory service on financial products: Seven days from either of the following dates:

a. The date on which contract documents are delivered under the main clause of Article 23(1);

b. In cases of the proviso of Article 23(1), the date of conclusion of the contract;

3. In cases of a loan product: 14 days from any of the following dates (if money, goods (hereafter referred to as "money or goods" in this Article) or service under a contract are paid, delivered, or provided later than either of the following dates, the date of payment, delivery, or provision):

a. The date on which contract documents are delivered under the main clause of Article 23(1);

b. In cases of the proviso of Article 23(1), the date of conclusion of the contract;

(2) The withdrawal of the offer under paragraph (1) shall become effective at the time specified in the following subparagraphs:

1. In cases of indemnity products, investment products, or advisory service on financial products: When an ordinary financial consumer dispatches a written notice to manifest his or her intention to withdraw the offer (including cases where such intention is communicated by the means prescribed by Presidential Decree; hereafter referred to as "written notice or other means");

2. In cases of loan products: When an ordinary financial consumer dispatches a written notice or other means to manifest his or her intention to withdraw the offer and return money or goods specified in the following items (excluding service already provided, but including rights to use certain facilities or to receive service; hereafter the same shall apply in this paragraph):

a. Money or goods already received;

b. Interest prescribed by Presidential Decree in connection with money already received;

c. Expenses prescribed by Presidential Decree, such as fees that a financial product distributor or advisor has already paid to a third party.

(3) When the offer is withdrawn under paragraph (1), the financial product distributor or advisor shall return money or goods already received from the ordinary financial consumer in any of the following manners:

1. In cases of an indemnity product: The financial product distributor or advisor shall return the money or goods already received, within three business days from the filing date of the withdrawal of the offer, and shall pay an additional amount calculated in accordance with Presidential Decree for the period during which the return of money or goods are delayed;

2. In cases of an investment product or advisory service on financial products: The financial product distributor or advisor shall return the money or goods already received, within three business days from the filing date of the withdrawal of the offer, and shall pay an additional amount calculated in accordance with Presidential Decree for the period during which the return of money or goods are delayed; provided, if the amount to be returned is not greater than the amount prescribed by Presidential Decree, such amount need not be returned;

3. In cases of a loan product: The financial product distributor or advisor shall return the money or goods already received, including fees received from the ordinary financial consumer in connection with the relevant loan, to the ordinary financial consumer, in accordance with Presidential Decree within three business days from the date on which it received the money or goods and interest and fees returned by the ordinary financial consumer under paragraph (2)2 and shall pay an additional amount calculated in accordance with Presidential Decree for the period during which the return of money or goods are delayed;

(4) Where the offer is withdrawn under paragraph (1), no financial product distributor or advisor may claim compensation for damage caused by the withdrawal of the offer or the payment of money as penalty.

(5) If an insurance event has already occurred before the offer of an indemnity product is withdrawn, the withdrawal of such offer shall not become effective; provided, the same shall not apply where an ordinary financial consumer withdraws the relevant offer, knowing that an insurance event has already occurred.

(6) Any special term or condition contrary to paragraphs (1) through (5) and unfavorable to ordinary financial consumers shall be void.

(7) Matters necessary for the exercise of the right to withdraw an offer, the effect thereof, etc. under paragraphs (1) through (3) shall be prescribed by Presidential Decree.

Article 51(Dispositions against financial product distributors and advisors) #

(1) If a financial product distributor or advisor registered under Articles 12, among financial product distributors and advisors, falls under any of the following subparagraphs, the Financial Services Commission may revoke the registration of its financial product distribution business or financial product advisory business under Article 12; provided, in cases of subparagraph 1, the Financial Services Commission must revoke the registration:

1. If a financial product distributor or advisor registers its business under Article 12 by fraud or other improper means;

2. If a financial product distributor or advisor ceases to maintain the requirements provided in Article 12(2) or (3); provided, the cases prescribed by Presidential Decree as those where a financial product distributor or advisor fails to maintain the requirements for registration temporarily shall be excluded;

3. If a financial product distributor or advisor continues its business operations during a period of suspension of business operations;

4. If a financial product distributor or advisor does not take corrective measures or suspend its business operations within the period specified by the Financial Services Commission after it received an order from the Financial Services Commission to take corrective measures or suspend business operations;

5. Other cases prescribed by Presidential Decree as those where serious damage is likely to be caused financial consumers’ interests or where it is considered impracticable to engage in the relevant financial product distribution business or financial product advisory business.

(2) In cases prescribed by Presidential Decree, such as cases where a financial product distributor or advisor falls under any of paragraph (1)2 through 5 or where it is considered that a financial product distributor or advisor is unlikely to operate its financial product distribution business or financial product advisory business legitimately because of its violation of this Act or an order issued under this Act, the Financial Services Commission may take any of the following measures in accordance with Presidential Decree; provided, the measure under subparagraph 1 shall be limited to financial product distributors and advisors registered under Article 12, among financial product distributors and advisors:

1. Complete or partial suspension of business operations for not more than six months;

2. An order to take measures to rectify the violation;

3. An order to stop the violation;

4. An order to publicly announce or post the fact that the financial product distributor or advisor has become subject to measures for the violation;

5. An institutional warning;

6. An institutional caution;

7. Other measures prescribed by Presidential Decree as those necessary for rectifying or preventing violations.

(3) Notwithstanding paragraph (2), the following subparagraphs shall apply to financial product distributors falling under subparagraph 6a, c, or e or subparagraph 7 d, e, or f of Article 2:

1. With respect to financial product distributors and advisors falling under subparagraph 6a of Article 2, the Financial Services Commission may take the measure under any of paragraph (2)2, 4, and 7 in response to the recommendation of the Governor of the Financial Supervisory Service or may authorize the Governor of the Financial Supervisory Service to take the measure under paragraph (2)3, 5, or 6;

2. With respect to financial product distributors and advisors under subparagraph 6c or e of Article 2 or subparagraph 7d, e, or f of that Article, the Financial Services Commission may take the measure under any of paragraph (2)2 through 7 according to the recommendation of the Governor of the Financial Supervisory Service or may authorize the Governor of the Financial Supervisory Service to take the measure under paragraph (2)5 or 6.

Article 52(Measures against executive officers and employees of financial product distributors and advisors) #

(1) In cases prescribed by Presidential Decree, such as cases where it is considered that an executive officer of a financial product distributor or advisor is unlikely able to work for the financial product distribution business or financial product advisory business legitimately because of his or her violation of this Act or an order issued under this Act, the Financial Services Commission may request the financial product distributor or advisor to take any of the following measures:

1. Removal of such executive officer;

2. Suspension performance of such executive officer’s duties;

3. Warning of reprimand;

4. Cautionary warning;

5. Caution.

(2) In cases prescribed by Presidential Decree, such as cases where it is considered that an employee of a financial product distributor or advisor is unlikely able to work for the financial product distribution business or financial product advisory business legitimately because of his or her violation of this Act or an order issued under this Act, the Financial Services Commission may request the financial product distributor or advisor to take any of the following measures:

1. Dismissal;

2. Suspension from office for not more than six months;

3. Salary reduction;

4. Reprimand;

5. Caution.

(3) Notwithstanding paragraph (1), the following subparagraphs shall apply to executive officers of financial product distributors and advisors falling under subparagraph 6a, c, or e of Article 2 or subparagraph 7d, e, or f of that Article:

1. With respect to executive officers of a financial product distributor or advisor falling under subparagraph 6a of Article 2, the Financial Services Commission may take the measure under paragraph (1)1 or 2 in response to recommendation from the Governor of the Financial Supervisory Service and may authorize the Governor of the Financial Supervisory Service to take the measure under in any subparagraph of paragraph (1)3 through 5;

2. With respect to executive officers of a financial product distributor or advisor falling under subparagraph 6c or e of Article 2 or subparagraph 7d, e, or f of that Article, the Financial Services Commission may take the measure under any subparagraph of paragraph (1) in response to recommendation from the Governor of the Financial Supervisory Service or may authorize the Governor of the Financial Supervisory Service to take the measure under any subparagraph of paragraph (1) 3 through 5.

(4) Notwithstanding paragraph (2), the following subparagraphs shall apply to employees of the financial product distributors and advisors falling under subparagraph 6a, c, or e of Article 2 or subparagraph 7d, e, or f of that Article:

1. With respect to employees of a financial product distributor or advisor falling under subparagraph 6a of Article 2, the Financial Services Commission may request the financial product distributor or advisor to take the measure under any subparagraph of paragraph (2);

2. With respect to employees of a financial product distributor or advisor falling under subparagraph 6c or e of Article 2 or subparagraph 7d, e, or f of that Article, the Financial Services Commission may request the financial product distributor or advisor to take the measure under any subparagraph of paragraph (2) in response to recommendation from the Governor of the Financial Supervisory Service or may authorize the Governor of the Financial Supervisory Service to request the financial product distributor or advisor to take such measure.

(5) When the Financial Services Commission or the Governor of the Financial Supervisory Service takes a measure against an executive officer or employee of a financial product distributor or advisor or requests a financial product distributor or advisor to take such measure under paragraphs (1) through (4), the Financial Services Commission or the Governor of the Financial Supervisory Service may concurrently take measures against the executive officers or employees who are responsible for the supervision of such executive officer or employee or may concurrently request the financial product distributor or advisor to take such measures; provided, such measures may be mitigated or exempted where the persons who are responsible for management and supervision have exercised due care in the management and supervision of such executive officer or employee.

Article 57(Penalty surcharges) #

(1) If a financial product distributor or advisor falls under any of the following subparagraphs, the Financial Services Commission may impose a penalty surcharge within a maximum of 50/100 of the revenue that it gained from contracts relating to such violation or an amount equivalent to such earnings (hereafter referred to as "revenue" in this Article); provided, in cases prescribed by Presidential Decree as cases where the person who committed such violation has no revenue gained from contracts relating to the violation or where it is impracticable to calculate such revenue, a penalty charge not exceeding one billion won may be imposed:

1. Where a financial product distributor or advisor omits to explain any important matter, in violation of Article 19(1), or omits to provide a written explanation or obtains confirmation, in violation of paragraph (2) of that Article;

2. Where a financial product distributor or advisor commits an act falling under any subparagraph of Article 20(1);

3. Where a financial product distributor or advisor commits an act falling under any subparagraph of Article 21;

4. Where a financial product distributor or advisor makes an advertisement of a financial product or other matter, in violation of Article 22(3) or (4).

(2) If a financial product distribution agent or broker whom a financial product direct seller authorized to act as his or her agent or broker for the conclusion of a contract for a financial product or the conduct of other relevant transaction (limited to financial product distribution agents and brokers acting as agents only for one financial product direct seller under this Act or any other finance-related statute or regulation) or an executive officer or employee of a financial product direct seller commits an act falling under any subparagraph of paragraph (1), the Financial Services Commission may impose a penalty surcharge on the financial product direct seller within a maximum of 50/100 of the revenue that he or she gained from contracts relating to such violation; provided, the amount may be reduced or exempted if the financial product direct seller has not neglected due care and supervision over relevant business activities to prevent such violation.

(3) Where the Financial Services Commission may order a financial product distributor or advisor to suspend its business operation under Article 51(2)1 but suspending business operations is likely to seriously affect interested persons or undermine public interest, the Financial Services Commission may impose a penalty surcharge within a maximum of the profit that the financial product distributor or advisor is expected to gain during the period of suspension of business operations, in lieu of the suspension of business operation, in accordance with Presidential Decree.

(4) Matters concerning the determination of the revenue gained from contracts relating to a violation under paragraph (1) shall be prescribed by Presidential Decree in consideration of the causes of change according to environmental changes, characteristics of each type of financial product, the size of business of financial product distributors and advisors, etc.

Article 60(Extensions of payment deadline for penalty surcharges and payment by installment) #

(1) The Financial Services Commission may require a person on whom a penalty surcharge has been imposed pursuant to Article 57 or 58(2) (hereinafter referred to as "person liable to pay a penalty surcharge") to extend the deadline for payment of the penalty surcharge or to pay the penalty surcharge in installments pursuant to the proviso to Article 29 of the Framework Act on the Administration, and in such cases, the Financial Services Commission may require the person to provide security, if deemed necessary.

(2) If a person obligated to pay a penalty surcharge intends to obtain permission for the extension of the deadline for the payment of the penalty surcharge or the payment in installments under paragraph (1) shall file an application therefor with the Financial Services Commission no later than 10 days before the deadline for payment.

(3) If a person obligated to pay a penalty surcharge who has the deadline for payment extended or is permitted to pay in installments under paragraph (1) falls under any of the following subparagraphs, the Financial Services Commission may revoke the decision to extend the deadline for payment or to permit the payment in installments and may collect the penalty surcharge in a lump sum:

1. If the person obligated to pay a penalty surcharge fails to pay the penalty surcharge payable in installments by the deadline for payment;

2. Where he or she fails to comply with a request for the provision of security or commits an act that damages the value of the provided security;

3. If it is found that it is impossible to collect the whole amount or balance of a penalty surcharge due to forced execution, the commencement of an auction, the declaration of bankruptcy, the dissolution of the corporation concerned, or the disposition on the coercive collection of a national tax or delinquency of a local tax;

4. Where it is deemed possible to pay a penalty surcharge in a lump sum because the grounds prescribed in the subparagraphs of Article 29 of the Framework Act on the Administration cease to exist;

5. If any other cause or event equivalent to the causes and events under subparagraphs 1 through 4 has occurred.

(4) Matters necessary for the extension of the deadline for a penalty surcharge, payment in installments, provision of security, etc. other than those provided in paragraphs (1) through (3) shall be prescribed by Presidential Decree.

[This Article Wholly Amended on Sep. 14, 2023]

Article 69(Administrative fines) #

(1) Any of the following persons shall be subject to an administrative fine not exceeding 100 million won:

1. A person who fails to prepare internal control standards, in violation of Article 16(2);

2. A person who fails to explain an important matter, in violation of Article 19(1), or who fails to deliver a written explanation or obtain confirmation, in violation of paragraph (2) of that Article;

3. A person who commits an act falling under any subparagraph of Article 20(1);

4. A person who commits an act falling under any subparagraph of Article 21;

5. A person who makes an advertisement of a financial product or other matter, in violation of Article 22(1), (3), or (4);

6. Where a financial product distribution agent or broker who is engaged by another financial product distribution agent or broker as an agent or a broker for the conclusion of a contract for a financial product or other relevant transactions commits any of the following acts, the latter financial product distribution agent or broker who engages the former financial product distribution agent or broker as an agent or broker for such transactions; provided, the financial product distribution agents and brokers who engaged other persons as brokers or agents but have not neglected exercising due care and supervising such persons with respect to the transactions concerned in order to prevent their violations shall be excluded:

a. Where a financial product distribution agent or broker fails to explain an important matter, in violation of Article 19(1), or fails to deliver a written explanation or obtain confirmation, in violation of paragraph (2) of that Article;

b. Where a financial product distribution agent or broker commits an act falling under any subparagraph of Article 20(1);

c. Where a financial product distribution agent or broker commits an act falling under any subparagraph of Article 21;

d. Where a financial product distribution agent or broker makes an advertisement of a financial product or other matter, in violation of Article 22(3) or (4);

7. A person who fails to deliver contract documents to a financial consumer, in violation of Article 23(1);

8. Where a financial product distribution agent or broker who is engaged by a financial product direct seller as an agent or a broker for the conclusion of a contract for a financial product or other relevant transactions commits an act falling under Article 25(1)2, the financial product direct seller who engages the financial product distribution agent or broker as an agent or broker for such transactions; provided, the financial product direct sellers who engaged other persons as brokers or agents but have not neglected exercising due care and supervising such persons with respect to the transactions concerned in order to prevent their violations:

9. A person who fails to inform financial consumers of the matters referred to in any subparagraph of Article 27(3) or who fails to post a mark or present the relevant certificate to financial consumers, in violation of that paragraph;

10. A person who uses characters with the meaning of ‘independent’ in a name or an advertisement, in violation of Article 27(4);

11. A person who commits an act falling under any subparagraph of Article 27(5);

12. A person who fails to record data or maintain and manage data by types, in violation of Article 28(1);

13. A person who refuses, obstructs, or evades an inspection conducted under Article 50(1), without good cause.

(2) Any of the following persons shall be subject to an administrative fine not exceeding 30 million won:

1. A person who fails to identify information, to obtain confirmation, to maintain and manage information, or to provide the confirmed information without delay, in violation of Article 17(2);

2. A person who solicits the conclusion of a contract, in violation of Article 17(3);

3. A person who fails to identify information, in violation of Article 18(1);

4. A person who fails to give notice of the fact that the financial product concerned is not appropriate or to obtain confirmation, in violation of Article 18(2);

5. A person who commits an act falling under any subparagraph of Article 25(1);

6. A person who demands or accepts money, goods, or any other economic benefit, in violation of Article 25(2);

7. A person who fails to notify a financial consumer of the information falling under any subparagraph of Article 26(1), in violation of that paragraph, or a person who fails to post a mark or present a certificate, in violation of paragraph (2) of that Article.

(3) Any of the following persons shall be subject to an administrative fine not exceeding 10 million won: <Amended on Jul. 11, 2023>

1. A person who contacts an ordinary financial consumer for purposes of introducing financial products or soliciting contracts, in violation of Article 21-2(2);

2. A person who visits or contacts an ordinary financial consumer for purposes of introducing financial products or soliciting contracts, in violation of Article 21-2(3);

3. A person who fails to report any change in the requirements for registration, in violation of Article 48(3).

(4) Any person who fails to prepare a list of his or her executive officers or employees who intend to conduct door-to-door sales or telemarketing, in violation of Article 16-2(1), who fails to allow the verification of the identity of an executive officer or employee who intends to conduct door-to-door sales or telemarketing, in violation of paragraph (2) of that Article, or who fails to disclose his or her name, etc., in violation of paragraph (3) of that Article, shall be subject to an administrative fine not exceeding five million won. <Added on Jul. 11, 2023>

(5) Administrative fines under paragraphs (1) through (4) shall be imposed and collected by the Financial Services Commission, as prescribed by presidential Decree. <Amended on Jul. 11, 2023>

ACT ON THE PROTECTION OF FINANCIAL CONSUMERS

Article 1(Purpose) #

Article 2(Definitions) #

Article 3(Types of financial products) #

Article 4(Classification of financial companies and other relevant persons by type of business) #

Article 5(Scope of application) #

Article 6(Relationship to other statutes) #

Article 7(Fundamental rights of financial consumers) #

Article 8(Responsibilities of financial consumers) #

Article 9(Responsibilities of the State) #

Article 10(Responsibilities of financial product distributors and advisors) #

Article 11(Prohibition of business activities of persons other than financial product distributors and advisors) #

Article 12(Registration of financial product distributors and advisors) #

Article 13(Guidelines for interpretation of obligations in business activities) #

Article 14(Duty of good faith) #

Article 15(Non-discrimination) #

Article 16(Responsibility of financial product distributors and advisors for management) #

Article 16-2(Preparation of list of executive officers and employees engaging in door-to-door sales or telemarketing) #

Article 17(Principle of suitability) #

Article 18(Principle of appropriateness) #

Article 19(Obligation to explain) #

Article 20(Prohibition of unfair business activities) #

Article 21(Prohibition of unfair solicitation) #

Article 21-2(Matters to be observed in relation to door-to-door sales and telemarketing) #

Article 22(Obligations relating to advertisements of financial products) #

Article 23(Obligation to provide contract documents) #

Article 24(Prohibition of agency or brokerage for distribution of financial products through unregistered persons) #

Article 25(Prohibited acts of financial product agents and brokers) #

Article 26(Obligation of financial product distribution agents and brokers to notify) #

Article 27(Rules on business activities of financial product advisors) #

Article 28(Keeping, maintenance, and management of records) #

Article 29(Protection of financial consumers) #

Article 30(Financial education) #

Article 31(Financial education council) #

Article 32(Pubic disclosure of comparison of financial products) #

Article 33(Organization for Mediation of Financial Disputes) #

Article 34(Composition of Mediation Committee) #

Article 35(Withdrawal of appointment, and cancellation of commissioning, of members of Mediation Committee) #

Article 36(Mediation of disputes) #

Article 37(Meetings of Mediation Committee) #

Article 38(Disqualification of, challenge to, and refrainment by, members) #

Article 39(Effect of mediation) #

Article 40(Interruption of prescription) #

Article 41(Relationship to litigation) #

Article 42(Special case concerning small-amount dispute cases) #

Article 43(Operation of Mediation Committee) #

Article 44(Liability of financial product distributors and advisors for damages) #

Article 45(Liability of financial product direct sellers for damages) #

Article 46(Withdrawal of offer) #

Article 47(Termination of illegal contract) #

Article 48(Supervision over financial product distributors and advisors) #

Article 49(Financial Services Commission’s power to issue orders) #

Article 50(Inspections of financial product distributors and advisors) #

Article 51(Dispositions against financial product distributors and advisors) #

Article 52(Measures against executive officers and employees of financial product distributors and advisors) #

Article 53(Notification of measures against retired executive officers and others) #

Article 54(Hearings) #

Article 55(Petition for objection) #

Article 56(Recording of dispositions and measures) #

Article 57(Penalty surcharges) #

Article 58(Imposition of penalty surcharges) #

Article 59(Petition for objection) #

Article 60(Extensions of payment deadline for penalty surcharges and payment by installment) #

Article 61(Collection of penalty surcharges and disposition on delinquency) #

Article 62(Refund of overpayment or erroneous payment) #

Article 63(Additional payment on refund) #

Article 64(Disposal of deficiency) #

Article 65(Entrustment of business affairs) #

Article 66(Guidance for and supervision over governor of financial supervisory service) #

Article 66-2(Exclusive jurisdiction) #

Article 67(Penalty provisions) #

Article 67-2(Penalty provisions) #

Article 68(Joint penalty provisions) #

Article 69(Administrative fines) #