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| Article 18 (Principle of Appropriateness) |
| (1) | When a financial product distributor intends to conclude a contract for a financial product with an ordinary financial consumer without soliciting the ordinary financial consumer to conclude a contract for an indemnity product, an investment product, or a loan product specified respectively by Presidential Decree, such financial product distributor shall obtain the information required in the relevant subparagraph, among the following subparagraphs, through prior interviews, inquiries, etc.: |
| 1. | Indemnity products: Information referred to in Article 17 (2) 1; |
| 2. | Investment products: Information referred to in Article 17 (2) 2; |
| 3. | Loan products: Information referred to in Article 17 (2) 3; |
| 4. | Information specified by Presidential Decree as considered necessary for financial product distributors to determine whether a contract for the sale of a financial product is appropriate to an ordinary financial consumer. |
| (2) | If a financial product distributor determines that the financial product concerned is not appropriate for an ordinary financial consumer in light of the information identified in accordance with the relevant subparagraph of paragraph (1), the financial product distributor shall notify the ordinary financial consumer of the fact in accordance with Presidential Decree and shall obtain confirmation on the notification by requesting the ordinary financial consumer to affix his or her signature or print his or her name and affix his or her seal, by tape-recording oral statements of the ordinary financial consumer, or by obtaining confirmation from the ordinary financial consumer by other methods prescribed by Presidential Decree. The criteria for the determination on appropriateness shall be prescribed by Presidential Decree for the products referred to in each subparagraph of paragraph (1). |
| (3) | Further details of the information that financial product distributors shall obtain for each type of financial product under paragraph (1) shall be prescribed by Presidential Decree. |
| (4) | Paragraphs (1) and (2) shall not apply where a financial product distributor sells collective investment securities of a hedge fund under Article 249-2 of the Financial Investment Services and Capital Markets Act: |
| (5) | Financial product distributors under paragraph (4) shall inform the persons specified by Presidential Decree, in advance, in accordance with Presidential Decree, that they may separately request the application of paragraphs (1) and (2) under the proviso of paragraph (4). |