A Study on the Disclosure Duties of the Financial Consumer Protection legal system—Focusing on the comparative legal systems and the Investment-Oriented Insurance Products

• Main Authors: Mei-chun Chen, 陳玫君
• Other Authors: Chao-Chin Lin
• Format: Others
• Language: zh-TW
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/93899623937154978500

碩士 === 國立高雄大學 === 法律學系碩士班 === 102 === The financial crisis caused by the bankruptcy of Lehman Brothers affected the entire world and caused countless disputes in Taiwan over the investment in structured notes. Because such investments were not regulated, Taiwanese investors could not file claims against any party. The ultimate cause of this issue is that sellers of such financial instruments did not fulfill their duty of disclosure when they promote and sell such financial instruments. However, such a situation arose because the duty of disclosure on the part of financial institutions was not defined in statutes. This situation also instigated Taiwan to place greater emphasis on the protection of financial consumers. To ensure the reliable functions of the financial markets and implement the protection of financial consumers, the Financial Supervisory Commission of the Executive Yuan proposed the “Draft of Financial Service Act,” which was meant to be a comprehensive regulation. The revision of this draft was completed in 2008 and it was renamed as the “Financial Service Industry Act.” However, after the Executive Yuan rejected this draft in 2010, no progress has been made since then. The Financial Supervisory Commission again proposed the “Financial Consumer Protection Act,” and this law became effective on December 30, 2011, serving as a basis of protecting financial consumers. Because financial instruments have become a greater and greater part of consumers’ lives at unprecedented speed in recent years, and financial instruments are designed in a complicated manner and involve highly technical professional knowledge, a massive inequality is created between financial institutions and financial consumers in terms of information, financial wherewithal, and the ability to negotiate contracts. The reason why there are so many disputes in financial transactions is mostly the disparity of information and legal position of both parties. If the government only relies on the regulations set forth in the Civil Code and Consumer Protection Act as the regulation of resolving disputes in financial transactions, the government may not have enough tools at its disposal. This paper plans to discuss and explain duty of disclosure from the viewpoints of the information asymmetry and the focus of Financial Consumer Protection Act. This paper will analyze the origin, the basis of jurisprudence, and nature of duty of disclosure. This paper will discuss the legal outcome of relying on the regulations in Civil Code and Consumer Protection Act as means of dispute resolution between financial service institutions and financial consumers. This paper will use The United Kingdom and Japan as comparison. This paper will analyze the various deficiencies of our nation’s laws against the examples of financial reforms and regulations on duty of disclosure in those two countries and highlight the importance of regulations on duty of disclosure. This paper will also review the evaluation and measures of implementation on duty of disclosure after “Financial Consumer Protection Act” comes into effect. However, because there are numerous financial instruments, this paper will focus on investment-linked insurance that is most popular among ordinary consumers and used as a means of capital preservation and wealth management. This paper will discuss requirements on duty of disclosure to help clarify the importance of duty of disclosure for financial transactions and the protection of financial consumers. This paper attempts to analyze and explicate the possible deficiencies of duty-to-disclose in its implementation and propose corresponding recommendations in the revision of the law over the applicability of current regulations and the applicable laws when past regulations were in effect.