FSS: "Blocking Investment Product Ads That Mislead Investors... Stricter Reviews"

The production and review process for financial investment product advertisements will be significantly strengthened to prevent false or exaggerated advertising. Financial authorities will conduct prior reviews before advertisements are provided to external parties and have established new standards for penalties related to advertising violations.

On the afternoon of September 1 in Yeouido, Seoul, the Financial Supervisory Service (FSS) and the Korea Financial Investment Association (KOFIA) held a briefing session for the industry to explain the "Comprehensive Improvement Plan for Advertising Work of Financial Investment Companies." This is a follow-up measure after the FSS and KOFIA operated a task force (TF) over the past five months to develop the comprehensive improvement plan for the advertising work of financial investment companies.

Seo Jaewan, Senior Deputy Governor of the FSS, stated, "Advertisements for financial investment products that are subject to possible principal loss should be approached differently from general advertisements." He added, "We hope this will become an opportunity for financial investment companies to correct their perception that advertisements are merely a 'marketing tool' for attracting investors."

Through this improvement plan, the FSS has strengthened the production and review procedures for advertisements by financial investment companies. In particular, a pre-review process has been established for information provided externally, such as market outlooks, to prevent advertisements that induce trading of specific stocks before such information is made available outside the organization.

Additionally, to prevent damages caused by false or exaggerated advertisements, a Chief Consumer Officer (CCO) will now participate in the advertising review decision process. Previously, there was no role for the CCO in the advertisement review process.

Specific inspection items have also been established for advertisements utilizing influencers and online channel operators. Financial investment companies will conduct pre-reviews at each stage—including contract, review, and post-management—for influencer advertisements to prevent controversy over undisclosed advertisements and similar issues.

The FSS has also moved to improve the KOFIA's advertisement review procedures. A new Advertising Committee will be established within KOFIA, and video advertisements for newly listed Exchange Traded Funds (ETFs) and high-risk investment products by financial investment companies will be added to the scope of review. In addition, criteria for imposing penalties related to advertisement violations will be established, and the standards for review will be improved.

The FSS will continue with post-management of advertisements as well. They will check whether posted advertisements have undergone prior review and conduct regular post-inspections at least once a year. In addition, to activate the KOFIA's false and exaggerated advertisement reporting center, accessibility to the reporting center on the homepage will be enhanced, and internal procedures for receiving and processing reports will be specified.

The improvement plan, after being pre-announced in early September along with amendments to KOFIA regulations, is expected to complete the necessary procedures by mid-October and take effect in January of next year.

This content was produced with the assistance of AI translation services.