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On 19 November 2004, the Financial Supervisory Commission announced rules to be observed by subsidiaries of financial holding companies when conducting joint marketing ac-tivities. The main points are as follows:
Dedicated counters providing services from other financial sectors may be set up on the business premises of any type of financial institution. But such counters must be clearly distinguished from counters providing ser-vices in the host institution's own sector.
Personnel of the host institution who meet the relevant eligibility or licensing conditions may additionally conduct business in another financial sector, but such personnel must be registered by the other subsidiary in accordance with the relevant legislative and regulatory provisions. If while conducting the business such personnel violate provisions relevant to such business, they may be prosecuted or disciplined under the law gov-erning the relevant sector. If personnel working at counters of one financial sector conduct marketing activities on behalf of an-other financial institution, the latter should be liable to compensate customers for losses suffered due to such personnel's actions; if the host institution has acted willfully or negli-gently it should also bear liability.
If subsidiaries of a financial holding company make use of each other's customer information for joint marketing activities, they must ensure that such use complies with the following re-quirements:
1.Each subsidiary must add to the provisions of its customer service contracts governing the use of personal data, a field and signa-ture boxes to allow the customer to choose whether to consent to data being disclosed to and used jointly with other group com-panies for joint marketing purposes. The signature boxes should enable a clear dis-tinction to be drawn as to whether the customer consents only to the provision of basic personal data (name, date of birth, ID number, telephone number, address), or consents also to the provision of data on such matters as account transactions, credit, investments, and insurance.
2.If a financial holding company and its subsidiaries conduct joint marketing ac-tivities, when they disclose or make joint use of customers' basic personal data, no customer's ID number or date of birth should appear in any data output by a user terminal, including visual displays and generated reports, except as a tool for cross-comparison by computer programs.
3.The provisions of customer service con-tracts governing the joint use of customer data should be displayed in bold black type and clearly indicate a simple method by which the client may at any time require that joint use of such data cease.
Applications for subsidiaries to jointly conduct cross-sector marketing operations should be made to the FSC on their behalf by the financial holding company. According to the nature of the service counters to be hosted in other institutions, the financial holding company should also inform the Securities and Futures Bureau, Insurance Bureau, and/or Bureau of Monetary Affairs of the FSC.
The above rules will take effect on 1 January 2005.
