The Financial Supervisory Service met with 13 real estate trust companies and urged them to strengthen risk management and internal controls.
The FSS said it held a "meeting with executives of real estate trust companies" on the morning of 12th at the main conference hall of the Korea Financial Investment Association in Yeouido, Seoul. The meeting was attended by financial authorities, including Seo Jae-wan, assistant vice governor for capital markets at the FSS, and executives in charge of finance and internal control at real estate trust companies.
At the meeting, the FSS emphasized that real estate trust companies play a key role in ensuring a smooth supply of real estate, while also calling for risk management through securing soundness. In particular, since concerns remain about the risks at business sites under guaranteed-completion projects, it asked for preemptive management of lagging progress rates, missed guaranteed-completion deadlines, and the like.
A themed inspection conducted 4th year revealed weaknesses in internal controls, including employees' pursuit of private interests, and the agency also urged a revamp of internal control systems. The Korea Financial Investment Association, after discussions with the industry, is preparing to establish the "model regulations on business conduct for real estate trust companies" in Nov. In line with this, it also stressed that each company should put in place effective internal control mechanisms.
The FSS said, "We plan to continue communicating with the industry to support the sound development of the real estate trust sector," adding, "We will respond strictly to unsound business practices by real estate trust companies that undermine trust as financial institutions."