Dear friends,

To enhance the protection of the rights of financial consumers, and to improve the development of Taiwan financial market, the Executive Yuan approved a draft amendment to the Financial Consumer Protection Act ("Draft Amendment") on November 20, 2014, which will be submitted to the Legislative Yuan for readings soon..  

We summarize the major points of the Draft Amendment below.

1.To avoid improper selling of financial products or services by the associated persons of financial service enterprises ("Enterprises") to strive for performances, the Draft Amendment requires that the Enterprises shall establish the remuneration system for sales persons after considering clients' interests and the risk possibly generated from the financial products, and such system shall be submitted to the board of directors for approval. (Article 11-1)

2.To make the Enterprises sell the complicated high risk products more prudently, and to bring the attention and increase the responsibility of the internal management on the selling, the Draft Amendment requires that the initial selling of complicated high risk products by the Enterprises shall be submitted to the board of director or board of managing directors for approval.  If such Enterprises are local branches of foreign financial institutions, it shall be approved by the local responsible person. (Article 11-2)

3.With reference to the Consumer Protection Law, the Draft Amendment specifies that upon financial consumers' requests, the courts may order a punitive damage up to one (1) to three (3) times the amount of actual damages of the financial consumers as a result of the willful or negligent violation of this Act of the Enterprises. (Article 11-3)

4.For administrative supervision and protection of the rights of financial consumers, the Draft Amendment authorize that if the Enterprises fail to act according to the financial consumer protection requirement under Chapter 2 of this Act, the FSC may take administrative measures such as warnings, suspension of financial product selling, operation suspension or suspending or terminating the duty of the responsible persons or employees of the Enterprises, depending on the severity of the circumstances. (Article 12-1)

5.To consistently and promptly resolve the financial consumer disputes caused by the same reason and fact, to assist the disadvantaged consumers to participate in the ombudsman procedure and to save ombudsman resources, the Draft Amendment provides the mechanism for class ombudsman. (Article 13-1)

6.Considering that if the Enterprises have fully performed the resolution achieved in the ombudsman, it is not necessary to submit the ombudsman statement to the court for approval so as to go for compulsory execution, the Draft Amendment thus specifies that under such circumstance, the ombudsman institution will be exempted from submitting the statement to the court for approval. (Article 30)

7.To raise the attention of Enterprise on protection of financial consumers' rights and to increase the liabilities for infringing financial consumers' rights, the Draft Amendment provides that violation of this Act will be subject to an administrative fine of no less than NT$300,000 (around US$10,000) and no more than NT$10,000,000 (around US$333,333).  The FSC may further increase such fine to the extent of the profits received by the Enterprises, which is not subject to the maximum fine amount above. (Articles 30-1 and 30-2)

8.For enforcement of financial supervisory and personal data protection, the Draft Amendment provides that the FSC may request the ombudsman institution to provide the relevant information on the business, finance and financial consumer disputes. (Article 32-1)

Stacy Lo / Angela Lin