Official Institutionalization of Online Deposit Comparison and Recommendation... Platform Brokerage Limit Set at 1%

Financial Services Commission Establishes New Registration Criteria for Deposit Product Brokerage Services

The comparison and recommendation service for deposit products through online platforms will be officially institutionalized.

On September 28, the Financial Services Commission announced that it will put into effect a proposed amendment to the 'Supervisory Regulations on Financial Consumer Protection,' which introduces the sale agency and brokerage of deposit-like products as a registered business under the Financial Consumer Protection Act.

Online deposit comparison and recommendation, prepaid balance linkage with banks, and settlement services for e-commerce operators were designated as innovative financial services in 2022 and have been operated as such. However, the current supervisory regulations do not provide for the relevant registration requirements, putting a limit on fully institutionalizing these services.

Accordingly, the Financial Services Commission has included new registration criteria for deposit-type product sales and brokerage services through online channels in this amendment. The commission plans to apply the registration requirements for loan-type product sales and brokerage, while separately establishing education standards and conflict of interest prevention measures tailored to the characteristics of deposit-type products.

The procedure for verifying compliance with conflict of interest prevention standards will also be strengthened. The number of algorithm verification institutions will be expanded from the current single entity, Koscom, to three: Koscom, Financial Security Institute, and Korea Financial Telecommunications & Clearings Institute. Re-verification will be mandatory at least once a year.

New business conduct regulations to ensure fair product comparison and recommendation and consumer protection will also be introduced. The 'exclusive affiliation principle,' which used to require brokers to handle only one financial company's products, will make exceptions by requiring comparison and recommendation of products from at least three financial companies.

In addition, restrictions such as prohibition on providing gifts or cashback exceeding 30,000 won per transaction, setting an intermediary cap at 1% of the previous year's new deposit and savings amount per platform per financial company, and banning the intermediary of products from financial companies subject to prompt corrective action, will also apply.

The obligations to compare and recommend products from at least three financial companies and to reverify algorithms will also apply to online loan product brokerage firms, while the prohibition of providing special benefits will apply to all loan product brokerage firms.

Consumer protection measures related to advertising will also be strengthened. The prohibition on deceptive advertising, which previously applied only to guaranteed products, will be expanded to all financial products. This will ban advertisements that mislead consumers into believing the contracting party is a financial company when in fact it is the sales or brokerage entity.

The amended regulation will be effective three months after the notice period, which lasts until November 9. Businesses operating as innovative financial services at the time of implementation will be allowed to operate without registration for a six-month grace period from the effective date.

This content was produced with the assistance of AI translation services.