Do you feel financial world is somewhat irrelevant to you?
Is the image of people with black suits with ties dealing numbers comes as the first thing to your mind when you think of financial markets?
It’s true that it is hard to imagine the dynamics of financial markets because of the fact that the movement is quite hard to notice compared to goods markets. What do people buy and sell in the financial markets? Well, it’s hard to define the exact boundary of financial market but it’s safe to say people buy and sell money in this market. People who possess more money than they want to spend on goods try to lend money to people who need it for various reasons. To sum up, money is the object in the transaction of financial markets and an interest rate is the price of the money. In the real world, the financial market mostly works in the following way. There are big investment companies selling financial products to investors promising big profits from the investment they’re making. Borrowing money from banks is also an important part of dynamics of financial markets.
Since we’ve looked into basic dynamics in financial markets, now it’s time to look into some potentially dangerous loans and sales happening in these markets. Just like in goods markets there are damages to people during the process of consuming financial products in the market – maybe some of you have already noticed this fact from global financial crisis! Since financial markets have a short history compared to goods markets and there are some special characteristics of money itself, regulations for protecting consumers in financial markets are not enough yet. Today we’re going to look through some of the measures FSC will be taking in order to have an advanced financial market in Korea.
FSC is planning to construct a legal infrastructure in order to fully protect many people participating in financial transactions. Especially FSC is trying to make a law related to protecting financial consumers go into effect within this year. The main contents of the law just mentioned above contain a system that classifies each financial item into related groups and some uniform regulations according to each category. Also this law covers 6 principles applied when selling financial items, which is going to be enforced throughout the general financial transactions. The 6 principles consist of regulations and responsibilities for sellers in financial markets. For example when an investment company is trying to persuade a private investor into buying some financial items, it must first go through his or her purpose for investment, property conditions and investment experiences. If the company concludes the investment that he or she is considering is not appropriate, then it is responsible to dissuade the investor. Another examples of the 6 principles are a duty to inform private investors so that they fully understand the financial items they’re examining and some regulations on inappropriate advertisements. Moreover, penalties for breaking the rules will be reinforced.
Apart from the legal side of FSC’s measures, there are another side of it – financial education and public financial counseling services. According to specific groups of people such as the elderly, teenagers or working class about to retire soon, financial education will be diversified in order to provide suitable financial plans for each group. Furthermore, public financial counseling service will be given to people in a socially disadvantaged class so that they can talk one on one with professionals about financial problems they have.
Of course what I have told you so far is just a tip of the effort FSC is putting to make a better financial market. There are more specific steps designed carefully to protect consumers. I just hope today’s post can bring you guys closer not only to financial markets but also to FSC. Even though you’re not currently participating in the financial market, sooner or later you will be consuming financial items; therefore, I recommend you pay closer attention on what’s happening in financial markets and measures taken by FSC!
See you guys soon. 🙂
By Ha Eun Kim (firstname.lastname@example.org)