South Korea’s financial watchdog is moving to tighten oversight of investment advertising as some promotions use misleading phrases such as “steady like monthly rent” — which can be read as guaranteeing profits — or “targeting 15% annual returns,” which highlights unrealized performance.
The Financial Supervisory Service said it has begun a broad overhaul of advertising rules with the Korea Financial Investment Association to block false or exaggerated ads by financial investment firms and strengthen investor protection.
The FSS and the association said on the 23rd they launched an “advertising system improvement” task force with financial investment companies and held a kickoff meeting. The group includes industry participants such as securities firms and asset managers, as well as the Korea Financial Consumer Protection Foundation, to discuss changes from a consumer-protection perspective.As stock investing by individual and institutional investors has expanded, the capital market has grown quickly and marketing competition among financial investment firms has intensified. 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, amid the competition, have omitted essential information such as fees and risks or used exaggerated claims like “guaranteed profits” and “highest returns.” They also pointed to the rise of ads on social media and YouTube, including promotions using so-called “finfluencers,” and said existing rules have limits in managing them.
The task force will focus on expanding the scope of ads subject to prior review, improving review procedures and strengthening internal controls at firms. Discussions include reinforcing the association-led pre-screening function and improving oversight of companies’ own advertising channels. The FSS and the association said they plan to gather views broadly from the industry and financial consumers and finalize measures in the third quarter of this year.
“Financial investment company advertising should provide accurate information that helps investors make rational decisions,” said Seo Jae-wan, senior deputy governor of the FSS. “False and exaggerated advertising can undermine trust in the capital market,” he said, calling for active industry participation and stronger internal controls.
* This article has been translated by AI.
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