The financial authorities will completely overhaul the production and review system to block false and exaggerated advertisements for financial investment products that mislead investors. They also introduced a pre-review process for information provided externally and newly established rules for imposing penalties on violating advertisements.
The Financial Supervisory Service (FSS) and the Korea Financial Investment Association held a briefing session titled "Comprehensive plan to improve advertising operations of financial investment firms" at the association in Yeouido, Seoul, on the afternoon of the 1st for people in the financial investment industry. The plan is a comprehensive measure drawn up over the past five months by a joint task force formed by the FSS and the association.
On the day, Seo Jae-wan, an FSS deputy vice governor, said, "Advertisements for financial investment products that can incur principal loss must be approached differently from ordinary ads," and added, "With this opportunity, we ask financial investment firms to correct the view and perception that advertisements are merely a simple 'marketing tool' to solicit investors."
Through this improvement plan, the FSS strengthened the stages of advertising production and review by financial investment firms. To prevent situations in which information provided externally, such as market analyses, is misused as advertisements that induce trading of specific stocks, they made pre-review procedures mandatory before providing information.
To prevent consumer damage caused by false and exaggerated advertisements, the participation of the chief consumer officer (CCO) in ad reviews was institutionalized. This measure reflects criticism that the CCO's role was absent in the previous ad review process.
Standards for inspections responding to advertising and marketing using online influencers were also newly established. Financial investment firms must carry out pre-reviews at each stage from contracting with influencers to review and post-management to proactively prevent controversies over "undisclosed sponsorships."
The association-level ad review function will also be strengthened. An advertising committee will be established within the association, and video ads for newly listed exchange-traded funds (ETFs) and high-risk investment products presented by financial investment firms were newly included in the review scope. They also decided to clarify the basis for punishment by preparing standards for imposing penalties applicable to violations of advertising rules.
A post-monitoring system for advertisements will also be established. They plan to check whether ads already posted have undergone formal pre-review and conduct regular post-inspections at least once a year. To activate the association's center for reporting false and exaggerated advertisements, access paths on the website will be improved, and internal operating procedures for receiving and handling reports will be systematized.
The FSS plans to complete related procedures by mid-next month after a prior notice on revisions to the association's rules earlier this month. The revised plan will be fully implemented starting in January next year.