Responsibility sharing standards introduction briefing session held in relay by industry
Agreement as early as next month… Expected to be implemented from January next year
Following the banking sector, financial authorities will also ask secondary financial sectors such as insurance and savings banks to take responsibility for non-face-to-face financial accidents such as voice phishing starting next year.
According to financial authorities and the financial sector on the 16th, the Financial Supervisory Service is holding a series of briefing sessions on the introduction of non-face-to-face financial accident responsibility sharing standards for second-tier financial institutions such as securities, insurance, and savings banks.
Since January of this year, the Financial Supervisory Service has established liability sharing standards that require financial companies to compensate a certain percentage when a user incurs financial loss due to a non-face-to-face financial accident, and has been implementing it starting with the banking sector, and is expanding this to the secondary financial sector. We are currently investigating the extent of the establishment of the Abnormal Transaction Detection System (FDS), which detects suspicious deposit and withdrawal transaction details.
An official from the financial authorities said, “As there are many businesses, we are coordinating an agreement to introduce responsibility sharing standards,” and added, “We are in the stage of discussing specifically when to introduce and implement the standards.”
Previously, starting January 1, the banking sector introduced standards for responsibility sharing.
The application of responsibility sharing standards is when a third party conducts an electronic financial transaction without the user’s consent, resulting in a non-face-to-face financial accident that causes financial damage. This applies to voice phishing, etc., when a third party transfers funds from the user’s account. However, voice phishing in which money is sent directly by the user rather than a third party, or voice phishing that involves face-to-face fraud rather than non-face-to-face, is excluded.
The liability sharing ratio of financial companies is divided into levels 0 to 3 according to the ‘standards for financial companies’ accident prevention efforts’ and ‘standards for the degree of user negligence’. The compensation rate is known to be around 20-50%.
The burden of proof is on the user to prove that a financial accident and damage occurred, and the financial company must prove that the damage occurred due to the user’s intention or negligence and that there was no intention or negligence of the financial company in causing the damage.
Afterwards, when the user requests compensation from the financial company, the financial company determines the compensation ratio and pays the compensation. In addition, if the user agrees to the calculation of the amount of damages and receives the compensation, the financial company must obtain written consent after sufficient explanation to the user in order to treat it as ‘a prescribed reconciliation has been established under Article 731 of the Civil Act’.
These standards apply much differently to second-tier financial institutions. It is expected that financial authorities will conclude industry-specific agreements as early as next month. The agreement was originally scheduled to be signed this month and take effect from January 1st of next year, but it was partially postponed.
An official from the financial authorities said, “I understand that consultations by industry are in the final stages,” and “The standards for responsibility sharing are not different in the broad framework between the banking sector and the secondary financial sector.”
Meanwhile, low awareness, such as the fact that there are not many cases of compensation applications because the system is in the early stages of implementation, is a problem that needs to be solved.
As of the end of August, the number of applications for responsibility sharing standards submitted by the office of Democratic Party lawmaker Min Byeong-deok from the Financial Supervisory Service was 165, of which only 15 were autonomous compensation for the banking sector. As of June of this year, the status of voice phishing damage identified by the Financial Supervisory Service is in contrast to the 8,352 cases and 127.2 billion won for banks and non-banks combined.
(Seoul = News 1)
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How will the compensation process for non-face-to-face fraud be affected by the new regulations for financial institutions?
The article discusses new regulations being implemented by financial authorities to hold secondary financial sectors, such as insurance and savings banks, accountable for non-face-to-face financial accidents, particularly those involving voice phishing.
Key points include:
- Introduction of Liability Standards: Starting next year, these financial institutions will be required to implement standards that involve sharing responsibility for losses incurred by users due to non-face-to-face fraud.
- Current Implementation in Banking: Since January, these standards have been in effect for the banking sector, with compensation standards ranging based on the degree of preventive measures and user negligence. Compensation could be between 20-50%.
- User Burden of Proof: Users must provide evidence of financial damage occurring from fraud, while financial companies must prove that losses are due to user negligence and not their own.
- Coordination for Consistency: Financial authorities are working to ensure that the standards are aligned across various sectors, with plans for industry-specific agreements.
- Low Compensation Awareness: There is an issue with low awareness regarding the compensation process, indicated by a low number of applications for compensation compared to the large number of voice phishing incidents reported.
As these standards are still being developed and implemented, financial authorities are urging users to stay informed about the changes and the avenues available for reimbursement in cases of fraud.
the initiative aims to enhance consumer protection by imposing liabilities on financial institutions in cases of non-face-to-face fraud, particularly to address the increasing prevalence of voice phishing.