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Amendment to Laws Regarding Door-to-door Sales of Financial Products


A recent amendment to the Door-to-Door Sales Act (the “DDSA”) became effective on December 8, 2022.  Amendments to the Enforcement Decree of the Act on Financial Consumer Protection Law (the “AFCP”) and the Financial Consumer Protection Supervisory Rules (the “Supervisory Rules”), which reflect the changes introduced in the amended DDSA, also became effective on the same day.

The amended DDSA excluded the sale of financial products from the scope of the DDSA in order to address the ongoing criticism that, prior to the amendment, financial product distributors (as opposed to the individuals who originally designed them) could unfairly bear the losses arising from fluctuations in the value of financial products, and to encourage the sale of financial products beyond the bounds of financial companies’ branches.  Nonetheless, financial regulators intend to prevent repercussions such as door-to-door sales or telemarketing becoming too intrusive as a result of the amendment by strengthening financial consumer protection laws.  As such, it will be imperative to examine the relevant legislative changes and the responses of the financial sectors affected by such changes.

The previous AFCP prohibited salespersons from soliciting investment products to consumers through door-to-door sales without the consumer’s request (i.e., uninvited solicitation), and the specific scope of prohibition was set forth in the Enforcement Decree of the AFCP (hereby referred to as the “Enforcement Decree”).  To prevent the amended DDSA from causing an upsurge in uninvited solicitations, the amendments to the Enforcement Decree and the Supervisory Rules placed, in turn, certain restrictions on uninvited solicitations.  A proposed amendment to the AFCP, which will regulate the procedure and method of door-to-door sales of all types of financial products, is also pending at the National Assembly.

1.   Amendments to the Enforcement Decree and the Supervisory Rules

The previous Enforcement Decree permitted uninvited solicitations for “securities or exchange-traded derivatives under the Financial Investment Services and Capital Markets Act,” which had been criticized as allowing uninvited solicitations for all investment products except over-the-counter (“OTC”) derivatives.  In response, the recent amendment placed greater restrictions on uninvited solicitations.  Specifically, the amendment (i) differentiated “professional” financial consumers (i.e., those who possess a higher degree of expertise in financial products) and “general” financial consumers to prescribe different applicable restrictions, and (ii) required salespersons to inform consumers of the matters prescribed under Article 15 (1) of the Supervisory Rules (e.g., the means through which the salesperson obtained the consumer’s contact information and the salesperson’s intention to recommend a product through a real-time conservation in person or over the phone) before recommending a financial product, and to proceed with the solicitation only with the consumer’s consent even if the AFCP allows uninvited solicitation for such products.  Moreover, the amendment prohibited uninvited solicitations for highly sophisticated products, including private equity funds and exchange-traded/OTC derivatives to general financial consumers, regardless of whether the consumer provided his or her consent.

2.   Amendment to the AFCP

A further amendment to the AFCP (the “Proposed Amendment”) that strengthens consumer protection with regards to the door-to-door sales of all financial products (including investment products) is currently pending at the National Assembly.  Despite the enactment of the amended DDSA, the Proposed Amendment, if passed, shall continue to provide the necessary financial protection to consumers.  The key details are as follows:

  • Maintain a directory of door-to-door salespeople


Financial product distributors must keep a directory of their employees who engage in door-to-door sales or telemarketing.


Financial consumers may request verification of the identity of a door-to-door salesperson, and must be notified that the purpose of the visit or phone call is the solicitation of financial products.

  • Mandatory registration of general financial consumers who refuse to receive over-the-phone solicitations


Financial product distributors must comply with a general financial consumer’s request if said customer states that he or she does not wish to be contacted for recommendations of financial products.

  • Restriction on the hours during which financial consumers can be contacted 


Unless the financial consumer wishes otherwise, financial product distributors may not contact consumers to introduce or recommend financial products at nighttime (9:00 p.m.-8 a.m.).

  • Burden of proof regarding contract execution 


In case of a dispute, a direct financial product distributor or a financial product advisor shall bear the burden of proving whether the relevant sales contract was executed and the date of execution.

  • Nullification of special agreements that violate the consumer’s right to access data


Special agreements that infringe upon a financial consumer’s right to access data are considered null and void.

  • Exclusive jurisdiction in legal disputes


In cases of lawsuits concerning in-person or remote sales of financial products, the court having jurisdiction over the financial consumer’s address or residence shall have exclusive jurisdiction.


The Financial Services Commission stated that it will continue its efforts to pass the amendment promptly and at the same time will make preparations such as self-regulation, through which the changes can be implemented in advance.

Starting from December 8, 2022, relevant industry associations have also adopted the Door-to-Door Sale Best Practices (the “Best Practices”) that reflect the amended DDSA.  The Best Practices include the following matters, which many financial companies have begun incorporating into their internal regulations and systems:

  • Job training for door-to-door salespersons

  • Obligation to inspect the appropriateness of the sales process and to keep records of the inspection results if a financial product sales contract is executed through a door-to-door sale

  • Obligation to preserve data and materials related to door-to-door sales

  • Disclosure obligations for financial product sales agents (sales agents must comply with disclosure obligations under the AFCP, such as notifying financial consumers of the scope of authority that has been delegated to them, and provide the signed sales contract to the financial consumer)

With the recent changes to the financial market caused by the COVID-19 pandemic and the rise of online platforms for financial products, remote sales of financial products have increased dramatically.  Given these changes, the amendments to the related laws and best practices will likely have a significant impact on banks and other financial institutions alike.  Furthermore, as financial regulators plan to closely monitor financial companies’ compliance with financial consumer protection laws, financial companies should thoroughly review their internal regulations and procedures on door-to-door sales in light of the recent changes to the relevant laws and best practices.


[Korean Version]