Can You Trust Financial Companies 100%?

The Financial Consumer Protection Act is a law that protects consumers who trade financial products such as loans, investments and insurance, and it applies commonly to all financial companies and financial products.
Its purpose is to strengthen the responsibility of financial companies that sell financial products, and to enable consumers to obtain their legitimate rights and accurate information so they can engage in sound financial product transactions.
The need to enact the Financial Consumer Protection Act emerged after the KIKO incident in 2008 and the savings bank bankruptcies in 2011, and it was first proposed in 2011.
However, it stalled for nearly 10 years before being passed at a plenary session of the National Assembly in 2020, and it was enacted and put into effect on March 25, 2021.
So why is the Financial Consumer Protection Act necessary?
Many financial products these days have become complex and difficult to understand. Older people in particular have an even weaker understanding of financial products.
In addition, there are many medium- to long-term products invested in for several years or more, and many products whose risks do not appear on the surface in the early stages.
The Financial Consumer Protection Act was created to solve the problem of shifting all the blame onto consumers for things consumers were not aware of.
Now let's look at how the Financial Consumer Protection Act protects consumers.
First, sellers must identify the investor's assets and investment experience in advance and recommend products suited to them, and must refrain from recommending products that are unsuitable.
Second, even for products that customers want to invest in of their own will, sellers must inform investors if the product is inappropriate in light of the investor's assets and experience.
Third, sellers must sufficiently explain the key details of a product so that customers can understand them.
Fourth, sellers must not use their superior position to engage in acts of pressuring consumers to buy more products.
Fifth, sellers must not cause customers to misunderstand by misrepresenting uncertain matters or failing to disclose important facts.
Sixth, sellers must not engage in false or exaggerated advertising when advertising products.
When we deal with financial companies, we should not invest in financial products out of blind trust in them.
As described above, financial companies, as sellers, have principles they must observe toward their customers.
If a problem arises after time has passed, it is ultimately consumers who suffer.
In the case of derivatives, the risk is high, and if something goes wrong the losses are very large and difficult to recover.
When filling out documents presented by a financial company, we should be aware of these points and fill them out carefully, and we should first check whether these principles are being properly observed before investing in a product.