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Families to be notified when seniors purchase financial products

Regulator seeks to provide double protection for vulnerable elderly customers

Starting in October, elderly people will receive twofold protection when subscribing to financial products, as it will become mandatory for service providers to notify a predesignated family member before confirming contracts.

The Financial Services Commission said Sunday that it has come up with action plans on the notification service for elderly financial product subscribers. The announcement came as a follow-up to the road map for financial consumer protection unveiled in April this year.

The notification service is to be provided to subscribers aged 65 or above who have indicated their intention to receive the service at the time of subscription.

The predesignated family member does not directly have legal rights over the contract but the notification offers a chance to review the conditions of the corresponding financial product and consider withdrawal or modification before the contract takes effect, according to officials.

Professional investors and insurance officials, who have sufficient knowledge about financial products and who are ready to take the affiliated risks, are excluded from this safety measure.

Petty-sum insurances with a monthly insurance fee of 50,000 won ($43) or less will also be exempted.

In its initial stage, the upcoming measure is to be applied to face-to-face contracts only, as online sales are usually made upon the purchaser’s own judgment, without a seller involved, and telemarketing sales already offer an additional 15 days of free contract withdrawal for customer protection.

The main purpose of the measure is to allow elderly people to reconsider their decision, as some of them could be vulnerable to marketing promotions, according to an official of the FSC.

“The notification service will be available from October this year, after individual financial companies build up their internal systems for the process,” said an official.

By Bae Hyun-jung (