Figure 1.
Figure 2.
VEC Estimates for post-Enactment Period
| Variable | Coeff. | S.E. | z | p>|z| |
|---|---|---|---|---|
| fin consumer L1 | .2824 | .1539 | 1.84 | 0.066 |
| fin consumer L2 | .3174 | .1196 | 2.65 | 0.008 |
| fin complaints L1 | −.0640 | .1269 | −0.51 | 0.611 |
| fin complaints L2 | −.1148 | .1257 | .91 | 0.361 |
| constant | 30.730 | 9.889 | 3.11 | 0.001 |
Comparison of Legal Frameworks
| Korea | UK | Japan | |
|---|---|---|---|
| Legislative Needs | Misleading financial products, OECD recommendations | Advancement of financial services, dual supervisory system | Advancement of financial markets, strengthening consumer rights |
| Legal System | Integrated Act | Integrated Act | Integrated Act |
| Discipline System | Detailed list-based regulation | Principles-based regulation | Principles-based regulation |
| Penalties | Fines, penalties, damages | Fines, penalties, damages | Administrative sanctions |
Consumer Rights Protection Systems
| Category | Korea | UK/Japan |
|---|---|---|
| Financial Education | Support for sound financial life, conduct education to strengthen consumers’ financial competence, and operate a comparative disclosure system | Promotion of financial education centered on private financial companies |
| Financial Dispute Settlement | Establishment of a “Financial Dispute Settlement Body” to manage financial disputes, securing one-sided binding force | Ombudsman, Dispute Resolution Bureau |
| Victim Relief Scheme | In the event of a consumer’s loss, obligation to compensate for damages | Punitive damages, class action lawsuits, and other severe damage suppression mechanisms |
| Protection of Consumer Rights and Interests | Consumers have right of withdrawal from subscription and right to terminate illegal contracts | Principles adoption only |
| Sanctions | Fines and penalties | Same principles |
VEC Estimates for pre-Enactment Period
| Variable | Coeff. | S.E. | z | p>|z| |
|---|---|---|---|---|
| fin consumer L1 | .1630 | .1478 | 1.10 | 0.270 |
| fin consumer L2 | .1408 | .1513 | 0.93 | 0.353 |
| fin complaints L1 | .2090 | .2899 | 0.72 | 0.471 |
| fin complaints L2 | .6738 | .2939 | 2.29 | 0.022 |
| constant | −5.786 | 7.093 | −0.82 | 0.415 |
The Six Major Business Conduct Regulations
| Category | Korea | UK/Japan |
|---|---|---|
| Suitability Principle | When selling products, consider age, consumer needs, investment propensity | Same principles |
| Propriety Principle | Considering the consumer’s financial situation and investment experience, appropriate products must be offered for sale | Same principles |
| Duty to Explain | The core structure of the product, the risks, the coverage, must be explained in a way that can be understood | Same principles |
| Prohibition of Unfair Business Practices | Prohibition of forcing exchange of a contract for another product or to reduce or change the linkage/partnership service in general | No detailed regulation other than principled regulation |
| Prohibition of Unfair Solicitation | Prohibition of false or misleading information about the product, or failing to notify about important characteristics | No detailed regulation other than principled regulation |
| Advertising Regulation | Mandatory disclosure of product structure and risk factors in advertising | Non-principled disclosure regulation |