South Korea’s financial watchdog is moving to tighten rules on financial and investment advertising after promotions using phrases such as “steady like monthly rent” and “targeting 15% annual returns” were cited as potentially misleading investors. The Financial Supervisory Service said it has begun an overhaul of the overall advertising system with the Korea Financial Investment Association to block false or exaggerated ads and strengthen investor protection.
The FSS and the association said on April 22 they will launch an “Advertising System Improvement” task force with financial investment firms on April 23 and hold its first kickoff meeting. The task force will include industry participants such as securities firms and asset managers, as well as the Korea Financial Consumer Protection Foundation, to discuss improvements from a consumer-protection perspective.The move comes as South Korea’s capital markets have expanded rapidly with increased stock investing by individuals and institutions, intensifying marketing competition among financial investment firms. Net stock buying by individual investors swung from 19.2 trillion won in net selling last year to 26.5 trillion won in net buying through the first quarter of this year.
Regulators said some firms have omitted essential information such as fees and risks, or used misleading claims including “guaranteed profits” and “top returns.” They also pointed to the growing use of social media, YouTube and so-called “finfluencers,” raising concerns that existing rules have limits in overseeing newer advertising channels.
The task force will focus on expanding the scope of ads subject to pre-screening, improving review procedures and strengthening internal controls at firms. The FSS and the association said they will consider reinforcing the association-led pre-screening function and improving oversight of firms’ own advertising channels. They plan to gather views from the industry and financial consumers and finalize measures in the third quarter of this year.
Seo Jae-wan, an assistant governor at the FSS, said financial investment advertising should provide accurate information that helps investors make rational decisions, warning that false or exaggerated ads can undermine trust in capital markets. He urged active industry participation and stronger internal controls.
* This article has been translated by AI.
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