As the advertising competition among financial investment companies overheated, the financial authorities moved to put on the brakes. They judged that investor protection has become more necessary as inadequate or improper ads have continued.
The Financial Supervisory Service and the Korea Financial Investment Association said on the 22nd that they launched the "task force (TF) to improve the advertising system to enhance the credibility of financial investment companies" and held its first meeting at the Korea Financial Investment Association in Yeongdeungpo-gu, Seoul. The meeting was attended by the Financial Supervisory Service, the Korea Financial Investment Association, the Korea Financial Consumers Protection Foundation, six securities companies, five asset management companies, and others.
Authorities note that as the advertising environment has changed rapidly with social media and YouTube, there are limits to management with existing association rules alone. In particular, for ads run on companies' own channels or using so-called "finfluencers," weak review systems and internal controls raise the likelihood of false or exaggerated advertising.
In fact, some financial investment companies were found to have used exaggerated or inaccurate phrases such as "launch of an ETF that can invest in a famous aerospace company," or wording that suggests guaranteed returns, such as "there is a way to receive monthly rent steadily from dividends."
At the meeting, participants reviewed problems in the current ad review system and discussed the need for improvements. Going forward, they will consider expanding the scope of association pre-reviews and improving review procedures, and they also agreed to prepare measures to strengthen internal controls related to companies' own reviews.
Seo Jae-wan, an assistant governor at the Financial Supervisory Service (FSS), said, "Ads by financial investment companies must be a means of providing accurate information for investors' rational investment decisions," adding, "The FSS and the Korea Financial Investment Association will, along with pushing to improve the advertising system, strengthen inspections of industry advertising practices."
The Financial Supervisory Service and the Korea Financial Investment Association plan to collect opinions from industry and consumers and finalize improvements within the third quarter of this year.