Financial authorities urged the establishment of a responsible compensation system, including clawing back bonuses in the event of misselling, for the newly launched integrated money account (IMA) products. They called for a full review of performance-based pay structures.
On the 20th, at its Yeouido headquarters in Seoul, the Financial Supervisory Service invited C-level executives from Korea Investment & Securities and Mirae Asset Securities, designated as the first IMA operators, and from Kiwoom Securities, which received approval to issue short-term notes, for a roundtable.
That day, the Financial Supervisory Service (FSS) emphasized the need for preemptive oversight to protect investors, saying, "Please review the performance compensation system so that responsible measures, such as clawing back bonuses in the event of misselling, can function."
Currently, financial authorities are also pushing to introduce a clawback system that would recoup employees' past bonuses in the event of a financial mishap.
The IMA, allowed for integrated financial investment businesses (IBs) with at least 8 trillion won in equity capital, is a performance-linked financial product with principal protection. It is not covered by deposit insurance like bank deposits, but because a securities firm guarantees the principal, investors can earn management performance gains on top of the principal if they do not cancel early before maturity.
To ensure the sound settlement of IMA products in the market, the Financial Supervisory Service (FSS) plans to form a joint task force (TF) with the industry from the design stage to check potential risks.
It also called for revising investor disclosures—such as prospectuses, terms and conditions, and management reports—so they are easy to understand from an investor's perspective, and for establishing internal procedures that can control misselling factors throughout the entire process from product design to sales and post-sale management.
Meanwhile, the Financial Supervisory Service (FSS) also called for a substantive role in IBs' function of supplying venture capital. By 2028, 25% of funds raised through IMAs and short-term notes must be invested in the venture-capital space, including startups and ventures.
The Financial Supervisory Service (FSS) said, "Please faithfully perform the function of 'substantive venture-capital supply,' not 'venture-capital investment in name only' to meet mandatory ratios," and added, "As seen in the real estate project financing (PF) crisis cases, concentration in specific assets can spread into a firmwide liquidity risk for securities firms, so please ensure preemptive risk management so that IMAs and short-term notes do not become destabilizing factors for the capital market."