The Cabinet has passed an amendment that allows the Financial Supervisory Commission to fine financial institutions if they fail to disclose the risks associated with their products.
The amendment was passed on Thursday. This is the first time that mandatory disclosure of financial product risks has been written into law. Failure to disclose the risks of financial products can result in a fine of up to NT$10 million (about US$323,000). Premier Jiang Yi-huah said the amendment will enhance consumer protection.
Moreover, in order to discourage the practice of financial institutions selling products to consumers just to boost sales figures, the new amendment stipulates that sales figures cannot be the sole criterion that determines a salesperson’s compensation. The new amendment also says that financial institutions will have to require approval from the board when they begin selling a complex and highly risky product for the first time.