Audit Agency Launches Initiative to Protect Financial Investors

On June 25, the Audit Agency announced it has initiated an audit of the Financial Services Commission and the Financial Supervisory Service in response to increased investment risks due to heightened volatility in the stock market.

The agency stated in a press release that it has begun a 20-day audit focusing on the protection of financial investors.

The audit team, consisting of nine members led by the head of the Industrial and Financial Audit Bureau's third division, will assess the adequacy of the financial authorities' guidance and supervision of financial companies, as well as their post-incident remedial actions, including inspections, sanctions, and dispute resolution.

The goal is to minimize transaction costs and the risks of mis-selling while enhancing the benefits for the general public, who are the ultimate consumers.

Specifically, the Audit Agency will first evaluate the appropriateness of the financial authorities' preventive and remedial measures for investor protection.

It will examine measures to prevent the mis-selling of financial products and the current state of related supervision and inspection efforts, as well as the establishment of protective measures for vulnerable groups in financial transactions.

Additionally, the agency will investigate the adequacy of internal controls regarding delays in inspection results and interim announcements, as well as the effectiveness of sanctions and shortcomings in the dispute resolution system.

The audit will also scrutinize the appropriateness of the cost and profit assessment systems related to stock trading, the accuracy of securities firms' loan interest rate calculations and disclosures, and whether differences in trading commissions among securities firms and exchanges are transparently disclosed.

Moreover, the agency will assess whether government regulations on retirement pension management are limiting investment opportunities.

It will consider the need to relax regulations on investments in risky assets to enhance retirement pension returns and the application of best execution standards for domestic stock transactions by pension funds and mutual aid associations, ensuring orders are executed at favorable prices for investors.

The Audit Agency stated, "Through this audit, we aim to ensure the appropriateness of the supervisory and inspection functions of financial authorities and to prevent the burden on financial companies from being passed on to general investors. We will improve unreasonable regulations and secure the effectiveness of post-incident remedies to create a financial investment environment where the public can invest with confidence."

It added, "This audit is part of our initiative to shift towards a consumer and public benefit-centered audit paradigm, focusing on assessing the protection of general financial investors rather than targeting specific individuals."