FSS Chairman Lee Chan-jin stated that he is reviewing the issue of upfront fees for bank-listed index fund (ETF) trust products, saying, "It appears to be a textbook case of incomplete sales." This follows criticism that banks are selling products centered on upfront fees despite having the option to choose trailing fees, thereby imposing excessive fee burdens on consumers.
During the National Assembly Committee on Finance's audit of the Financial Supervisory Service on the 19th, when People Power Party lawmaker Suh Il-jun pointed out the issue of upfront fees for bank ETF trust products, Chairman Lee responded, "We view this matter as a textbook case of incomplete sales," adding, "We are conducting an inspection into that area."
According to Seo (Rep.), fee revenue related to ETF trusts at the six major banks reached 600 billion won from January last year through May this year. Seo (Rep.) pointed out, "Is it not because of the very high upfront fees compared to trading via securities firms' mobile platforms?" and asked, "Why are they all using upfront fees when trailing fees are also an option?"
The banking sector has primarily utilized the upfront fee method, which deducts fees at the time of enrollment, in the sale of ETF trust products. This has raised concerns that it is difficult for investors to recover fees already paid even if they cancel the product or realize profits over a short period.
In August, the Financial Supervisory Service instructed banks to exclude upfront fee revenue from ETF trust products from employee performance evaluations or reduce its weighting. When Seo (Rep.) confirmed this measure, Chairman Lee affirmed it.
Seo (Rep.) stated, "Each of these details ultimately benefits the public," adding, "Only when the Financial Supervisory Service provides guidance even on such detailed matters can those benefits be returned to the people."
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