The Financial Supervisory Service launched on-site inspections of sellers in connection with the "Belgian fund" total-loss case. This is the first consumer protection-related inspection since Lee Chan-jin took office as FSS governor.
According to the financial investment industry on Jan. 15, the FSS began on-site inspections that day of Korea Investment & Securities, KB Kookmin Bank, and Woori Bank, which sold the Belgian fund.
The fund, created in Jun. 2019, invested in long-term leasehold rights of local buildings used by the Belgian government. It raised a total of 90 billion won, of which Korea Investment & Securities sold 58.9 billion won, and Kookmin Bank and Woori Bank sold 20 billion won and 12 billion won, respectively.
The fund was initially expected to generate revenue by selling the leasehold after five years of management, but the sale failed due to a local real estate slump. The entire 90 billion won in raised funds was written off.
As the situation unfolded, some investors claimed that the fund was marketed by emphasizing "100% occupancy" and "safe investment" at the time of fundraising. They argue that misselling occurred because the product's risks were not properly explained.
Korea Investment & Securities is offering voluntary compensation of up to 50% to investors, but with the FSS launching inspections, there is talk that liability for compensation could expand. As the FSS has recently emphasized "consumer protection" in line with the Lee Jae-myung administration's financial policy stance, some expect this inspection to be tougher than earlier cases.