One of the most often-raised issues at our blog these days is, ‘protection of financial consumers’. The issue has been addressed several times by FSC’s Chairman Kim Seok-Dong, in accordance with the recent financial paradigm shift focusing on financial consumers. He emphasized the significant of protecting financial consumers, while delivering his New Year’s address. “Financial entities should be socially responsible so as to provide financial consumers with protections in market”
‘Protection of financial consumers’ might sound too ‘vague’ for you to understand its concept. In brief, it is meant to allow financial consumers to have appropriate information about financial products and services, which will lead them to make a right choice among various options. Therefore, for the ends of protecting financial consumers, proper information should be given to financial consumers in a timely manner.
Unlike normal goods, for example a bottle of water or a dozen of pencils, ‘financial products’ seem to be involved with a lot more complicated details. First of all, there are many pages of terms and conditions. If you have ever signed up for insurance contract, you would find out that normally the related document is about 15-page long. You would have barely read them all. In those 15 pages, unnecessary information is included, or same elements are overlapped here and there. Once you try reading them, you would be lost by all the jargons for insurance products. You literally read terms and conditions, while not completely understating what those terms are exactly meaning.
If you read such a contract and sign up for an insurance product, is your right as financial consumer protected? You would say, ‘NO’. Without receiving understandable and appropriate information about your financial product, you, as a financial consumer, are losing your right to be protected in market. To deal with this issue, new measure was introduced. Namely, it is ‘Revision on Insurance Product Descriptions’. It seeks to enhance protection of financial consumers by delivering more easily accessible and understandable explanation for insurance products. Revisions include details as follows;
- Insurance product description should be no more than 7~8 page long
- Explanation should be written in a storytelling flow
- Terms should be written in plain languages, excluding contract jargons
- Specific examples should be included to help understanding
With this revision, it is expected that financial consumers do read specifications for their insurance products and accordingly know about their rights under the contract. Keep seeking your right as a financial consumer!