Amidst ever-growing consumer damages due to financial products, insurance products ranked the top cause of consumer complaints among financial instruments according to a recent survey by the Korea Consumer Agency (President: Kim, Young-Seen, www.kca.go.kr). Number of consumer complaints related to financial products filed to the KCA grew by 24.2% y-y to 22,354 cases in 2009 from 17,996 cases in 2008, while consumer redress cases amounted to 992 cases in 2009, a 11.8% growth y-y from 887 cases in 2008. (Case analysis below is based on consumer redress).
o Scope of business operators is limited to financial institutions described in ‘Act on Structural Improvement of Financial Industry’.
After conducting an analysis on consumer redress (992 cases) related to financial products filed to the KCA in 2009, the top cause of consumer complaints was ‘Insurance Instruments (767 cases or 77.3%) followed by ‘Credit Card (128 cases or 12.9%), ‘Bank·Non-bank Bank (65 cases or 6.6%), and ‘Securities (32 cases or 3.2%).
o Insurance: Life Insurance and Non-life Insurance
o Bank · Non-bank Bank: Installment Finance Company, New Community (Saemaul) Finance Association, and Mutual Savings & Financing
Details of insurance-related consumer damages include 1) refusal of payment or underpaid insurance payment (465 cases, 60.6%); 2) improper business practices of insurance operators (136 cases, 17.7%); and 3) damages due to improper sales or mis-selling (125 cases, 16.3%).
Based on these results, the Agency is going to make a proposal for drawing up measures to improve systems and strengthening guidance and supervision against improper business practices of financial institutions to Federation of Supervisory Service and continues to ask consumers using financial products to closely examine and keep a written contract just in case.
Meanwhile, the KCA conducts consumer counseling activities for specified areas such as banking and insurance by responding to consumer complaints filed via a Single Nationwide Consumer Counseling Center (☎1372), launched on Jan. 3rd, 2010.
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