▲ Financial Supervisory Service
The Financial Supervisory Service (FSS) has called on the asset management industry to strengthen investor protection following a series of troubled cases in high-risk products such as overseas real estate funds.
The FSS held a meeting today (September 9) with executives from asset management companies and the Korea Financial Investment Association, where it explained measures to tighten the disclosure requirements in securities registration statements for high-risk funds and urged efforts to boost consumer confidence.
Seo Jae-wan, Deputy Governor of the FSS for Capital Markets, pointed out that "investments have been entirely wiped out in some overseas real estate funds and REIT products due to the deterioration of underlying assets and subordinated equity investment structures," urging asset managers to exercise rigorous risk management.
"Investor sentiment is shrinking due to recent worsening market conditions, such as global geopolitical risks and interest rate uncertainties," he emphasized, adding, "Since high-risk public funds target retail investors, the 'investor-first principle' must take root so that risk factors can be identified from the investor's perspective in advance."
The FSS has recently been working to step up self-inspections by asset managers regarding overseas real estate funds and push for mandatory disclosure of core risks.
Following inspections of major asset managers in the wake of the total loss cases involving overseas real estate funds last year, it was found that local due diligence reports on real estate investments by overseas firms lacked detailed analysis and evaluation of specific risk factors.
In response, the FSS has significantly strengthened accountability by requiring asset managers to conduct internal reviews of local due diligence performed by overseas entities, and making it mandatory for the chief executive officer and compliance officer to sign off along with evaluation opinions from the internal control department.
In addition, building on the "Fund Core Risk Guidelines" introduced last August, the FSS plans to implement improved securities registration statements starting on the 30th for 10 types of high-risk funds, including overseas real estate funds, overseas REITs, and leveraged or inverse funds.
Once these improvement measures take effect, core investment risks and past large-scale loss histories will be disclosed, which is expected to enhance investors' understanding of risks.
Previously, the FSS established a special review team within the Asset Management Supervision Bureau last January and introduced a focused screening system targeting high-risk funds.
Going forward, the FSS plans to intensively check whether high-risk product structures and the "Fund Core Risk Guidelines" have been reflected in self-inspection reports during the review process.
Asset managers and officials who attended today's meeting also expressed their commitment to making efforts to launch products that consumers can invest in with peace of mind.
(Photo: Yonhap News)
※
Copying, redistribution, and unauthorized use in AI training are strictly prohibited.