The Financial Supervisory Service established a system which enables consumers to search financial products from all areas and compare their characteristics at a single platform.
This one-stop service for search and comparison has been operated and con- sidered favorable for financial consumers. The FSS decided to provide additional information regarding loans, bank deposits/installment savings, tax-saving invest- ment products and credit/debit cards.
It is expected that the expanded service will help users rationally choose financial products which are suitable for their purposes and also prevent them from wasting times and costs. Furthermore, the service will encourage competition in a free market and contribute to improving information asymmetry.62
Notes
1. The Financial Supervisory Service (FSS) which is the main body of the inte- grated supervisory agency was established on January 2, 1999, under the Act on the Establishment of Financial Supervisory Organizations, Act No. 5490, enacted as of December 31, 1997. This Act is the general statue governing the current organizational structure offinancial regulation in Korea.
2. One of the central issues in the debate on how to reform the regulatory structure, is whether or not to create and reassign the consumer protection function to a separate regulator, and reform the current structure where the FSS oversees both prudential regulation and consumer protection functions.
3. The Financial Services Commission (“FSC”) a governmental commission that oversees the FSS regardingfinancial supervision, has made a legislative notice on June 28, 2016 (Notice No. 2016-197), andfinalized the government bill on April 25, 2017. The FSC prospects the Bill to be submitted to the National Assembly in May 2017. (http://www.lawmaking.go.kr/lmSts/govLm/
2000000168047?gnb=2&snb=3&lnb=1&lmPlnSeq=1000000127310).
4. Article 2 Para. 8 of the Proposed Bill.
5. Article 2 Para. 9 of the Proposed Bill.
6. Article 2 Para. 10 of the Proposed Bill.
7. Article 62 of the Proposed Bill.
8. Articles 51–52 of the Proposed Bill.
9. Articles 16–22 of the Proposed Bill.
10. Articles 54, 62 of the Proposed Bill.
11. Article 18 of the Proposed Bill.
12. Articles 45–47 of the Proposed Bill.
13. Article 3 of the Proposed Bill.
14. Article 6 of the Proposed Bill.
15. Criticism that consumer protection issues were treated in a fragmented ad hoc manner has elicited several unsuccessful legislative bills, the most recent bill being the Proposed Bill discussed in Part 1.
16. Act No. 8635, enacted on August 3, 2007 (effective on February 4, 2009).
17. Act No. 139, enacted on May 5, 1950.
18. Act No. 973, enacted on January 15, 1962.
19. Act No. 5374, enacted in August 28, 1997.
20. Use and Protection of Credit Information Act, Act No. 4866, enacted on January 5, 1995.
21. Fair Debt Collection Act, Act No. 9418, enacted in February 6, 2009.
22. Article 52-2 Para. 2 of the Banking Act; Article 24-4 Para. 1 of the Enforcement Decree of the Banking Act.
23. Article 52-2 Para. 2 of the Banking Act; Article 24-4 Para. 2. of the Enforcement Decree of the Banking Act.
24. Article 52-2 Para. 2 of the Banking Act; Article 24-4 Para. 2 of the Enforcement Decree of the Banking Act; Article 89 of the Regulation on Supervision of Banking Business; Articles 70–76 of the Detailed Regulations on Supervision of Banking Business.
25. Article 52-2 of the Banking Act; Detailed Regulations on Supervision of Banking Business Article 78.
26. Article 52-3 Para. 2 of the Banking Act.
27. Article 52-2 Para. 1 of the Banking Act; Article 24-4 of the Enforcement Decree of the Banking Act.
28. Article 34-2 of the Banking Act (Enacted under the amendment of March 29, 2016, Act No.141290).
29. Article 34-3 of the Banking Act (Enacted under the amendment of March 29, 2016 Act No.141290).
30. Act No. 972, enacted on January 15, 1962.
31. The Capital Market Act abolished and replaced the previous major capital market laws such as the Securities and Exchange Act, Futures Trading Act, Korea Securities and Futures Exchange Act, Indirect Investment Asset Management Act, Trust Business Act and Merchant Banks Act.
32. A technical term defined under Article 8 of the Capital Markets Act, which includes securities brokers and dealers, investment banks and investment advisory companies that are licensed or registered with the FSC.
33. A technical term defined under Article 9 Para. 6 of the Capital Markets Act;
generally meaning a retail or unsophisticated investor.
34. A technical term defined under Article 3 of the Capital Markets Act which includes securities and derivatives.
35. Articles 47 and 58 of the Capital Market Act; Article 53 of the Enforcement Decree of the Capital Market Act.
36. Article 47 Para. 2 of the Capital Markets Act.
37. Article 57 Para 2 of the Capital Markets Act.
38. A technical term defined by Article 6 Para. 5 of the Capital Market Act, which is similar to a mutual fund.
39. Article 57 Para 3 of the Capital Markets Act.
40. Article 4-37 of the Regulation on Financial Investment Business.
41. Article 46-2 Para. 1 of the Capital Markets Act.
42. Article 46-2 Para. 2 of the Capital Markets Act.
43. Article 49 of the Capital Markets Act.
44. Article 55 of the Capital Markets Act.
45. Article 71 Paras. 1 and 2 of the Capital Markets Act.
46. Article 71 Para 3 of the Capital Markets Act.
47. Part 4 (Articles 638 to 739-3) of the Commercial Act (Act No. 1000, enacted in January 20, 1962).
48. Article 95 of the Insurance Business Act.
49. Article 95-2 of the Insurance Business Act (Added by amendment on July 23, 2010).
50. Article 95-4 Para. 2 of the Insurance Business Act (Added by amendment on July 23, 2010).
51. Article 95-4 Para. 3 of the Insurance Business Act (Added by amendment on July 23, 2010).
52. Article 95-3 Para. 1 of the Insurance Business Act (Added by amendment on July 23, 2010).
53. “Ordinary policyholder”is defined under Article 2 Para. 20 of the Insurance Business Act, generally meaning a retail policy holder that lacks expertise on insurance contracts. A “professional policyholder,” on the other hand, are entities such as the government or financial institutions that are capable of understanding insurance contracts based in their expertise.
54. Article 95-3 Para. 3 of the Insurance Business Act (Added by amendment on July 23, 2010).
55. Article 95-5 of the Insurance Business Act (Added by amendment on July 23, 2010).
56. Article 97 of the Insurance Business Act.
57. FSS Annual Report 2016, Financial Supervisory Service.
58. KDIC Annual Report 2016, Korea Deposit Insurance Corporation.
59. Consumer Complaint Mediation, Financial Supervisory Service.
60. Long Term Care Insurance, National Health Insurance Service.
61. FSS Press Release March 25, 2015, Financial Supervisory Service.
62. Financial Consumer Information Portal.
Hongjoo Junghas been teaching at SungKyunKwan University since 1991, right after obtaining his Ph.D. degree in the area of Risk Management and Insurance at the Wharton School, University of Pennsylvania. His research interests include financial convergence, financial consumer protection, social security system, in addition to the RMI. In the year 2010 and 2015, Dr. Jung played a key role in organizing the Korean Academy of Financial Consumers and the International Academy of Financial Consumers respectively.
Misoo Choihas been teaching at Seoul Digital University since 2003, right after obtaining Ph.D.
degree in the area of Insurance at SungKyunKwan University. Her research interests includefi- nancial consumer protection, dispute cases offinance and insurance. Dr. Choi is a member of the board of directors of Korean Academy of Financial Consumers and the International Academy of Financial Consumers respectively.
Youkyung Huhis a doctoral candidate (Doctor of Juridicial Science; SJD) at the University of Virginia School of Law and a member of the Korean Bar Association. Her research interests include financial regulation, consumer protection, financial regulatory structure and securities regulation. Her work experience includes serving as legal counsel at the Korean Financial Supervisory Service, South Korea’sfinancial regulatory agency. She earned LL.M. degrees from Harvard Law School (2013) and Seoul National University (2012) and a Bachelor of Laws from Ewha Womans University.
Financial Consumer in Malaysia:
Regulators Efforts and Measurements for Consumer Protection
Ahcene Lahsasna
Abstract The public (or retail) consumer is a very important aspect in anyfinancial market. Although they do not provide the bulk of thefinancing income compared to business consumers or corporations, they make up in terms of quantity and is an essential contributor to the performance of any financial institution. However, financing retail consumers are very much fragile and volatile in nature due to their inability to gasp their ownfinancial capability as well as the tendency to overextend their credit limit which may create problems in the future and affect their ability to pay their financing. This in turn, creates problems for the financial institutions making the recovery process very lengthy and expensive. With that in mind, it is imperative that the retail consumers are educated and taught the proper ways to manage their credit and protect themselves against the inability to pay their financing. Thus, the purpose of this chapter is to highlight the importance of consumer protection and the means that have been put in place by the central bank of Malaysia, Bank Negara Malaysia (BNM) to help increase customer awareness and financial literacy in Malaysia. This chapter will also highlight the challenges that are faced in consumer protection and efforts that have been made to improve consumer protection. This chapter found that the highest percentage of loan approved in Malaysia are loans from the household sector and despite the measures to increasefinancial literacy and consumer awareness that have been put in place by BNM, there has been a steady increase of bankruptcy cases and scam victims for the past years in Malaysia. It would be interesting to see the impact of the measures put in place by FSA 2013 and IFSA 2013 on financial institutions and retail consumers and it is recommended that a more stringent regulative framework be put in place to address the increase in bankruptcy and scam scandals among the working population.
Keywords Financial inclusion Financial consumerConsumer protection Financial literacy
A. Lahsasna (&)
Malaysian Financial Planning Council, Kuala Lumpur, Malaysia e-mail: lahsasna@gmail.com
©Springer Nature Singapore Pte Ltd. 2018
T.-J. Chen (ed.),An International Comparison of Financial Consumer Protection, https://doi.org/10.1007/978-981-10-8441-6_11
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1 Introduction
The average consumer or the retail consumer is the backbone of any country. The prosperity of the people can be used as a yardstick to measure the economic condition of any country. If there are aflurry of activities in the market, be it the financial markets or even the local wet market, it is a sure sign that businesses are doing well and the local (or retail) consumers are able to proactively engage in the economy. Despite the importance of thefinancial consumer as part of the economy, it could be seen that the path of thefinancial consumer is paved with risks. The average consumer faces many challenges when making financial decisions, and even savings decisions (one part of anfinancial decision that a retail consumer will make other thanfinancing, investment, retirement decisions etc.) the requirements before an individual can make an informed decision is very demanding (Lusardi 2008). The consumer is expected to have collected various information and be able to make forecasts on factors such as interest rates, projected inflation, dividend payments, opportunity costs involved if he or she were to save in one particular bank compared to another bank and many others. Thus, an individual faces many challenges and risks when trying to make and commit tofinancial decisions which will affect their daily lives. And without proper knowledge and exposure towards financial awareness and protection, a consumer might fall intofinancial pitfalls such as over-extending their credit limit and capacity, bankruptcy, and scams making poorfinancial decisions, lack offinancial planning, lack of awareness offinancial protection and many others. With that in mind, this chapter aims to explore the avenues that are put in place by the Malaysian government and its central bank, Bank Negara Malaysia to help improve consumer awareness and financial pro- tection as well as the reasons why a consumer would fall intofinancial distress and the current trend in bankruptcy in Malaysia.
This chapter is structured into four (4) sections; the first section provides an introduction towardsfinancial literacy and, also looks into the background of the country. The second section describes the current Malaysian financing spectrum focusing especially on retail financing and the third section explores the mecha- nisms that have been put in place by the Malaysian government. The fourth section then looks into the improvements that have been made by the Malaysian govern- ment on the regulations in thefinancial sector. Finally this chapter concludes on the worrying fact that despite the efforts made by the government and BNM, there has been a steady increase in bankruptcy and financial scams among Malaysians and efforts should be taken to look into the matter and identify the underlying reasons as well as develop measures to address them.