Mediation of financial disputes
Establishment of the Financial Dispute Mediation Committee
- The Financial Dispute Mediation Committee (hereinafter “Mediation Committee”) is established within the Financial Supervisory Service to deliberate and decide on matters related to the mediation of financial disputes arising between mediation target institutions, financial consumers, and other stakeholders (Article 33 of the Act on the Protection of Financial Consumers).
※ “Institutions subjectto mediation” refer to the following institutions (Article 38 of the Act on the Establishment of Financial Services Commission):
· Banks established with authorization under the Banking Act;
· Financial investment businesses, securities finance companies, integrated financial companies, and securities registration agencies under the Financial Investment Services and Capital Markets Act;
· Insurance companies under the Insurance Business Act;
· Mutual savings banks and their central associations under the Mutual Savings Bank Act;
· Credit cooperatives and their central associations under the Credit Cooperative Act;
· Specialized credit finance companies and combined credit businesses under the Specialized Credit Finance Business Act;
· NongHyup banks under the Agricultural Cooperative Act;
· SuHyup banks under the Fisheries Cooperative Act;
· Institutions subject to inspection by the Financial Supervisory Service under other laws; and
· Other entities engaged in financial business and related activities.
Dispute mediation procedure
Application for mediation
- Institutions subject to mediation, financial consumers, and other stakeholders can apply for dispute mediation with the head of the Financial Supervisory Service when there is a financial dispute (Article 36(1) of the Act on the Protection of Financial Consumers).
- In cases where multiple applicants jointly apply for dispute mediation, up to 3 representatives can be selected from among the applicants (Article 33(1) of the Enforcement Decree of the Act on the Protection of Financial Consumers).
※ Online application: Apply through the e-Financial Complaint Center website (
https://www.fcsc.kr)
※ In-person or mail application: Financial Supervisory Service headquarters (branch) (☎1332)
Recommendation for settlement by agreement
- Upon receiving a dispute mediation application, the head of the Financial Supervisory Service can notify the relevant parties of the content and recommend settlement by agreement (the main body of Article 36(2) of the Act on the Protection of Financial Consumers).
- If deemed necessary for recommending settlement by agreement, the head of the Financial Supervisory Service can request statements or submission of documents from the parties (including representatives) (Article 33(3) of the Enforcement Decree of the Act on the Protection of Financial Consumers).
Referral to the Committee
- If no settlement by agreement is reached within 30 days of receiving the dispute mediation application, the head of the Financial Supervisory Service must promptly refer the matter to the Mediation Committee (Article 36(2) and (4) of the Act on the Protection of Financial Consumers; Article 33(4) of the Enforcement Decree of the Act on the Protection of Financial Consumers).
· Where the content of the application is deemed inappropriate for dispute mediation by the head of the Financial Supervisory Service
· Where there is no benefit in proceeding with the recommendation to settle by agreement or the mediation procedure based on related laws or objective evidence
· Where a lawsuit has been filed before referral to the Mediation Committee
· Where the applicant has not responded to requests for supplementation of the application content more than twice
· Where the content of the application has no direct relationship of interest with the applicant
Deliberation by the Mediation Committee and drafting of mediation proposal
- Upon receiving the mediation, the Mediation Committee must deliberate on it and draft a mediation proposal within 60 days (Article 36(5) of the Act on the Protection of Financial Consumers).
Acceptance of mediation proposal
- When the Mediation Committee drafts a mediation proposal, the head of the Financial Supervisory Service can present it to the applicant and the relevant party and recommend its acceptance (Article 36(6) of the Act on the Protection of Financial Consumers).
- If the applicant and the relevant party do not accept the mediation proposal within 20 days of its presentation, it is deemed that they have not accepted the proposal (Article 36(7) of the Act on the Protection of Financial Consumers).
Drafting of mediation document
- If the parties accept the mediation proposal, the Mediation Committee drafts a mediation document, which is signed or sealed by the participating committee members and the disputing parties (Article 33(7) of the Enforcement Decree of the Act on the Protection of Financial Consumers).
Effect of dispute mediation
Effect of mediation
- If both parties accept the mediation proposal, the proposal has the same effect as a court settlement (Article 39 of the Act on the Protection of Financial Consumers).
Suspension of the statute of limitations
- Applying for dispute mediation has the effect of suspending the statute of limitations (the main body of Article 40(1) of the Act on the Protection of Financial Consumers).
- The statute of limitations is not suspended if no recommendation for settlement by agreement is made, or if it is not referred to the Mediation Committee (proviso to Article 40(1) of the Act on the Protection of Financial Consumers).
· In such case, if a court claim, participation in bankruptcy proceedings, seizure, provisional seizure, or provisional disposition is made within 1 month, the statute of limitations is deemed to have been suspended by the initial application for dispute mediation (Article 40(2) of the Act on the Protection of Financial Consumers).
- The suspended statute of limitations resumes from the occurrence of any of the following (Article 40(3) of the Act on the Protection of Financial Consumers):
· When both parties accept the mediation proposal; or
· When dispute mediation does not occur and the mediation process ends.
Suspension and notification of mediation procedures
- The Mediation Committee must suspend the mediation procedure for a case where mediation has been requested if the litigation process for that case has not been suspended (Article 41(2) of the Act on the Protection of Financial Consumers).
- If litigation is ongoing for cases of the same or similar nature involving multiple people for the same reason as the case where mediation was requested, the Mediation Committee can suspend the mediation procedure by its decision (Article 41(3) of the Act on the Protection of Financial Consumers).
Litigation support
- The Chairman of the Financial Supervisory Service can provide litigation support for the applicant in cases where the Mediation Committee deems the respondent’s actions to be significantly unfair and requests litigation support [see Article 32-2(1) of the Financial Dispute Mediation Rules].
· Cases where the mediation decision is based on the applicant’s claim in the Mediation Committee
· Cases before a mediation decision in the Mediation Committee where, in light of the mediation precedents of the Mediation Committee or court precedents, it is clear that the mediation decision will be based on the applicant’s claim