1.

Clarification of Meaning of “Revenue, Etc.”

Although the Financial Consumer Protection Act allows an administrative penalty of up to 50% of the violator’s “revenue, etc.” to be imposed, its meaning was rather loosely defined as “any form of money, etc. obtained from financial consumers as a result of the execution and performance of a contract, regardless of its title.” This ambiguity created challenges in applying the relevant laws and regulations to actual cases.

To better align with the legislative intent of imposing administrative penalties—recovering illicit economic benefits and deterring future violations—the Supervisory Regulations now clarify that “revenue, etc.” for each product type shall be calculated based on “transaction amount.”

The definition of “revenue, etc.,” is categorized into four distinct product types. Specifically, it is defined as (i) the “deposit amount or an amount equivalent thereto” for deposit-type products, (ii) the “loan amount or an amount equivalent thereto” for loan-type products, (iii) the “investment amount or an amount equivalent thereto” for investment-type products, and (iv) the “insurance premium received or an amount equivalent thereto” for coverage-type products.

In case it is difficult to uniformly apply “transaction amount” as the basis for imposing administrative penalties, the Supervisory Regulations set forth alternative methods to determine the appropriate amount of administrative penalties in addition to the transaction amount of the relevant financial product. For example, where a violation involves a financial institution forcing a consumer to purchase unwanted financial products in exchange for purchasing the desired financial product (e.g., requiring the consumer to purchase a deposit-type product if he/she wants to take out a loan), the base amount for administrative penalty includes not only the “principal amount of the loan” but also that of the other unwanted financial product.
 

2.

Detailed Guideline for Imposition Base Rate

Under the existing Regulations on Inspection Sanctions, there were only three levels of penalty base rates (50-75-100%), making it difficult to impose administrative penalties flexibly to specific cases. Under the amended Supervisory Regulations, the lower limit of the imposition base rate is 1% (instead of 50%), which takes into account guidelines applicable to violations of other laws such as the Personal Information Protection Act, and specific rates may be adjusted based on the materiality of the violation, so that the amount of administrative penalty is commensurate with such materiality. To address this, the amended Supervisory Regulations lower the minimum base rate to 1% (down from 50%), aligning with guidelines in other laws such as the Personal Information Protection Act. This allows specific rates to be adjusted based on the gravity of the violation, ensuring the penalty amount is commensurate with the misconduct.

Base rates are determined by assessing the severity of the violation through detailed criteria regarding its nature and degree. Accordingly, a base rate of “65% to 100%” will apply to very serious violations, “30% to less than 65%” to serious violations, and “1% to less than 30%” to less serious violations. The final base rate may be adjusted by 5 percentage points for every 0.1-point difference in the severity score.

Meanwhile, for minor procedural violations under the Financial Consumer Protection Act, (e.g., non-compliance with advertising protocols), the penalty base rate may be reduced by up to 50% of the original rate.
 

3.

Aggravating and Mitigating Factors

If the illicit economic benefit derived from the violation exceeds the calculated base administrative penalty, the penalty amount may be increased to fully offset such benefit. Conversely, administrative penalties may be reduced where the financial institution demonstrates specific mitigating factors. These factors include (i) excellent consumer protection evaluation results (up to 30% reduction), (ii) careful preparation and implementation of consumer protection standards (up to 50% reduction), and (iii) establishment of measures to prevent recurrence of consumer harm (up to 50% reduction or reduction by up to the amount of compensation).

However, if multiple mitigating factors apply concurrently to the same case, the maximum reduction will be capped at 75% of the base administrative penalty.
 

4.

Additional Adjustment Mechanisms

The FSC has also established a basis for reducing administrative penalties that exceed ten times the amount of unjust economic benefit. Such reductions will be based on comprehensive assessments of the violator’s ability to pay, the actual profits derived from the violation, and broader financial market conditions.