[Infostock Daily=Reporter Park Jeong-Do] In the future, banks should clearly explain to consumers the maximum possible losses incurred in selling non-deposit products such as funds and variable insurance. In the case of incomplete sales, it shall be reflected as a deduction factor in the performance evaluation and the performance bonus shall be recovered. In particular, the CEO will be the final responsible if an accident occurs due to sales such as funds.
The banking sector, along with the Financial Supervisory Service, enacted a "best practice for internal control of non-deposit products"on the 28th as part of follow-up measures to the DLF crisis.
Subject to the application are various funds, trusts, pensions, over-the-counter derivatives and variable insurance products sold by banks to individuals and small and medium-sized companies. However, products with low risk of principal loss, such as MMF and MMT operated as some safe assets, are excluded from the application. In addition, banks themselves, which are deemed to have a low risk of loss of principal and incomplete sales through the approval of the board of directors, can be further excluded from the regulation.
First of all, the 'Commodity Committee,' an executive-level consultative body, will oversee product policies in the future. The bank has formed a 'non-deposit product committee' that includes executive (CRO) in charge of risk management, compliance officers, and executive (CCO) in charge of consumer protection. The committee is responsible for the sale of non-deposit products, ranging from product planning to selection, sales activities, and follow-up management.
An executive in charge of sales shall not preside over a committee meeting. The operation of the Committee (call-up and supervision of meetings) shall be handled by an organization unrelated to business.
Where an executive in charge of consumer protection or other member determined by a bank opposes the sale of goods, sales shall be suspended.
The results of deliberation by the Committee shall be reported to the representative director and the board of directors, and relevant data, etc. shall be kept in writing, recording, etc. for ten years.
Establishment of standards for internal control for deliberation on the planning and selection of expensive goods.
The committee deliberates on whether to sell the product, the customer group to be sold, and the sales limit in consideration of the product investment strategy, product structure, and the risk of loss.
They also designate the scope of sales channels in advance, such as whether the products can be sold at general branches or Internet homepages, or only to PB centers, taking into account the risk and complexity of the products to be sold, product understanding and expertise of the sales staff.
In particular, qualitative factors such as the soundness and risk management ability of an asset management company, a product manufacturing financial company, should be evaluated and the results should be reflected in the product review.
In order to enhance the effectiveness of the operation of the Committee, deliberation on low-risk products may be delegated to a sub-organization, such as the 'Consultative Body of the Head of the Department.'.
However, high-level financial products, overseas alternative funds (basic assets overseas), and risk intermediate grades or higher (grades 1 to 3) should be reviewed by the committee.
Specifying the matters to be observed and prohibited by executives and employees at the time of selling the price-sharing goods
Also, when selling goods at a bank, the compliance (Do) and prohibition (Don't) of executives and employees are specified separately.
Compliance (Do) introduces a non-deposit product manual that compares and explains risks with deposit products when selling non-deposit products such as funds and variable insurance, and so that consumers can clearly recognize the maximum amount of losses assuming that losses are increasing through various diagrams and graphs.
Consumer information, such as investment propensity, should be renewed every two years and old information should not be used, and updated information should be guided and confirmed (agreed) by consumers.
The happy call system, which was limited to some financial investment products, will be expanded to all non-deposit products. The entire process should be recorded when selling high-level financial products to ordinary customers as well as unsuitable investors and the elderly (aged 65 or older), which are mandatory under the Capital Markets Act.
The happy call system, which was limited to some financial investment products, will be expanded to all non-deposit products. A happy call will be carried out until seven business days after the sale of the product to check for incomplete sales, including whether the product has been explained properly.
In addition, the sales process is recorded and recording quality is inspected periodically when high-level financial products are sold not only to unsuitable investors and the elderly (65 or older), which are mandatory under the Capital Market Act, but also to ordinary customers.
On the contrary, the restriction when selling products (Don't) is to encourage customers to invest in high-level financial products non-face-to-face through information and communication networks such as telephone and mobile phone messages (such as SMS, LMS and KakaoTalk). When advertising and promoting non-deposit products, they must be reviewed by compliance officers of banks that sell products in advance, and will be banned from recommending and promoting certain products through non-face-to-face channels without objective grounds such as circumstances and reasons for selection.
Sales of those who cause a large number of complaints, those with low work skills, and those who do not have related certificates, will also be limited.
After the sale, the company monitors changes in market conditions such as the sales status and profit and loss of each product, the status of civil complaints, a sharp drop in international oil prices and stock prices, fraud cases, and bankruptcy of asset management companies. The Committee shall be reported and deliberated on the results of monitoring, and the results of deliberation shall be periodically reported to the board of directors or the audit committee.
If necessary, measures such as suspension of sales of the product are also required.
In addition, the bank should establish an integrated computer system that provides a glimpse of the product structure, the trend of profit and loss, and the occurrence and processing status of civil complaints by the end of June next year. Through this, it periodically informs the customer of the profit and loss situation.
The bank will improve its branch performance evaluation index (KPI) which has been scoring on short-term performance.
KPI improvements include restriction on operating performance of certain non-deposit products as performance indicators, reflection of incomplete sales as a deduction factor in performance evaluation, expansion of weight, reflection of customer satisfaction items such as customer return rate in performance evaluation, recovery of performance-based bonuses when confirming incomplete sales, lack of reflection or reflection in the evaluation of sales after receiving confirmation of nonconformities from the elderly.
Each bank will reflect these best practices in its internal regulations by the end of this year. Through this, by the end of next year, the company plans to comprehensively review the operation status of model standards and review improvement measures.
Reporter Park Jeong-Do newface0301@naver.com
