The Korean Economic Forum
Financial Education as a Legal Tool for the Protection of Financial Consumers
Jabonn Kim (Korea Institute of Finance)Year 2020Vol. 13No. 2
Abstract
This paper intends to discuss some possible roles of financial education as a legal means for the financial consumers protection. If the legal role could be well defined, financial education would help substantially achieve financial consumer’s rational financial decision-making. Traditionally voluntary financial education program has been regarded to enhance financial literacy of consumers for rational decision-making. However, as behavioral economics says, consumers in reality show limited rationality, deficiency of self-control, and do not participate in voluntary financial education program. Financial education as a legal means defines financial education as a mandatory part of financial contract that directly and substantively engage in consumer’s rational decision-making at the right necessary moment in the financial contract. In order to implement legal role off inancial education, the reasonableness test should be introduced in the regulation of financial consumer protection. Mandatory financial education can replace or complement the duty to explain by sellers, and can be an evidence for conducting fiduciary duty by sellers, together with suitability test, that cares the best interests of financial consumers.}