Lee Chan-jin, head of the Financial Supervisory Service, warned that the asset management industry must shoulder its social responsibility to grow household assets and the economy by putting money to work, and said he would conduct tough oversight on what he called "self-cannibalizing" competition.
The Financial Supervisory Service held an "asset management company CEO roundtable" at the Korea Financial Investment Association in Yeouido, Seoul, on the morning of the 17th.
The roundtable was arranged to deliver messages on investor protection and supervision and inspection, while hearing the outlook for the asset market and industry proposals. Lee Chan-jin, Korea Financial Investment Association Chairman Seo Yu-seok, and CEOs from 20 asset managers took part in the event.
Lee noted that the domestic and external economic environment has recently faced uncertainty and that industries and finance are reorganizing their business models as artificial intelligence (AI) and digital transformation accelerate. He said this calls for a reset of the asset management industry's role.
Lee said, "Across the entire process of designing, manufacturing, and selling financial products, we must align the perspectives of investors, managers, and the supervisory authority," and urged, "From the CEO on down, with determination and a sense of responsibility, you must lead so the 'investor-first principle' works on the ground."
He also stressed that asset managers need to actively contribute to building a K-venture ecosystem. Lee said, "Shifting to productive finance is a task of the times to reverse the trend of low growth and shrinking investment, so the Financial Supervisory Service (FSS) will support building a connection platform between financial markets and innovative small and venture businesses, overhauling product and licensing review systems, and improving capital soundness regulations."
In particular, Lee pointed out that the management industry has been overheated, with repeated cases of product herding and copycats fixated on short-term performance. He also voiced concern over investors shunning public offering funds, including failures to adhere to the target date fund (TDF) principle of diversification.
Lee said, "Reckless competition and undermining customer trust erode the competitiveness of the asset management industry and drive consumers out of the market," adding, "The Financial Supervisory Service (FSS) will actively support launches of creative, innovative products, but will strictly supervise overheated competition such as mass launches of products riding short-term fads."
The FSS plans to support the establishment of a rational fee structure for public offering funds and to foster a long-term investment culture. Lee said that day, "We will proceed with measures such as refining the eligibility criteria for recognizing TDFs so they can take root as exemplary long-term investment vehicles."
Asset management CEOs attending the roundtable said they would actively leverage the industry's accumulated management experience and capabilities to help bed down business development companies (BDC) and the Public Growth Fund.
Korea Financial Investment Association Chairman Seo Yu-seok said, "We will strengthen the function of supplying venture capital so that productive finance can spread through the capital market," and added that the BDCs and the Public Growth Fund to be launched will be actively supported so they can back advanced strategic industries.
The management industry asked financial authorities for policy and institutional support so that products such as virtual asset products can be launched in the market. They also said funds should be included among the targets for long-term investment incentives and that related tax benefits, such as separate taxation of dividends for fund investors, need to be improved.
Finally, the asset management CEOs said they would faithfully implement the stewardship code as responsible institutional investors to help enhance corporate and shareholder value, and would strengthen internal control capabilities to bolster investor trust.
The FSS plans to support revisions to the stewardship code and inspections of its implementation status so that managers can fulfill their role as the capital market's "watchmen."