In the first half of this year, Asset Management Company A heavily promoted an ETF by highlighting the potential for investment in SpaceX, a private space company. However, the company ultimately failed to secure shares in the public offering, leading to significant backlash from investors. Around the same time, Asset Management Company B advertised its ETF product as the 'first in Korea to include SpaceX,' but it faced controversy over exaggerated claims as the actual investment structure differed from the promotional content.
In response to the ongoing issues of false and exaggerated advertising amid intense competition in financial investment products, regulatory authorities are stepping up their advertising management efforts. The Financial Investment Association is establishing an Advertising Committee and expanding the scope of review to include video advertisements on financial companies' own YouTube channels. Notably, fines of up to 50 million won will be imposed for serious cases of misleading or exaggerated advertising.
On September 1, the Financial Supervisory Service and the Financial Investment Association held a briefing on comprehensive improvements to advertising practices, attended by compliance officers, consumer protection officers, and advertising personnel from over 70 financial investment companies.
The most significant change is the overhaul of the advertising review system by the Financial Investment Association. A new Advertising Committee will be established, involving industry representatives, consumer groups, and media, to decide on key policies related to advertising reviews. Previously, there was no dedicated body for advertising policy, limiting the incorporation of external opinions from consumers and others.
Video advertisements on financial companies' own channels, including YouTube, will also be subject to review by the Financial Investment Association. This includes newly listed ETFs, high-risk financial investment products, and those designated by the Advertising Committee. Previously, video ads on self-operated channels were excluded from the review process, leading to inconsistencies in self-assessment standards among companies.
New criteria for imposing fines for advertising violations will also be established. Specific judgment factors, such as the motivation and outcome of the actions, will be defined to enhance predictability regarding sanctions. The Financial Supervisory Service and the Financial Investment Association are considering issuing warnings or cautions for minor violations, while serious infractions could incur fines of up to 50 million won.
Internal review procedures at financial investment companies will also be strengthened. Information provided externally, such as market and industry analysis, will be reviewed in advance to ensure it does not contain promotional content that could entice trading of specific stocks. Participation of the Chief Compliance Officer in the advertising review process will be mandatory. For advertisements utilizing online channel operators like YouTubers, a step-by-step checklist will be applied from contract to review and post-management.
The Financial Supervisory Service and the Financial Investment Association plan to announce revisions to related regulations in early September, gather feedback, and complete the amendments by mid-October, with implementation set for January 2027. An industry insider stated, 'With the rapid growth of the ETF market leading to an influx of advertisements, there may be instances of oversight. Strengthening the review process and post-management will help reduce such occurrences.'
* This article has been translated by AI.
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