The Financial Supervisory Commission (FSC) is to tighten regulations on local financial companies marketing to the elderly, after finding that many banks and insurers last year sold unsuitable products to older customers without a proper risk assessment, the regulator said last week.
The commission plans to implement stricter punishment for financial companies that inappropriately sell products to older customers, and would focus on firms’ marketing activities in its review this year of companies’ treatment of customers, it said.
The FSC is considering asking banks to collect complaints from older customers, and set up databases to systematically review and improve their internal controls and marketing practices, it said.
Photo: Kelson Wang, Taipei Times
The commission might also order the Financial Ombudsman Institution (FOI) to establish a “database of financial exploitation” to collect more data on inappropriate sales to older customers, it added.
The commission last year examined 10 banks, six insurers, six credit unions and three securities companies. It found that some companies sold products to older customers without properly assessing their risk appetite to boost sales, the commission said.
Some exaggerated the returns of products or incorrectly guaranteed profits, while some lured customers to buy investment-linked policies with credit cards so that their internal control department could not review the source of the premium, the commission said.
Some companies categorized older customers as “professional investors,” so that they could sell them complex products such as high-yield bonds or structured notes, even though the practice was not in the customers’ interest, as they would not be able to seek assistance from the FOI in any disputes, because professional investors are not protected by the Financial Consumer Protection Act (金融消費者保護法), the commission said.
The Banking Bureau revised its guidance for local banks last week, requiring them to improve their know-your-customer (KYC) and know-your-product (KYP) practices, it said.
The bureau is to give banks six months to adapt to the new guidance, it added.
The Insurance Bureau is also considering to revise its regulations to improve insurers’ KYC and KYP practices, it said.
The commission has asked banks not to introduce loan programs to older customers over the telephone and insurers to record the whole process of their sales agents selling products to older customers.
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