As competition among securities firms and asset management companies over investment advertising has intensified, leading to issues with false and exaggerated advertisements, financial authorities have prepared decisive measures. Going forward, CCOs (Consumer Protection Officers) will be required to participate in reviews of investment ads by securities firms and asset management companies, and an Advertising Committee (provisional name) will be established within the Korea Financial Investment Association to strengthen ad review processes.
On the 1st, the Financial Supervisory Service announced the "Comprehensive Improvement Plan for Advertising Operations of Financial Investment Companies" at the Korea Financial Investment Association and explained its contents to compliance officers, CCOs, and advertising operations personnel from approximately 70 financial investment companies. The improvement plan was developed as a result of joint operation with the industry of an "Advertising System Improvement Task Force" (TF) by the Financial Supervisory Service and the Korea Financial Investment Association from April to August.
Previously, advertisements that definitively described dividend investments as "money like steady monthly rent," or presented unrealized target returns such as "annual 15% premium return goal" or "expected distribution rate of about 17%" for covered call exchange-traded funds (ETFs), were flagged as problematic.
The financial authorities have prepared an improvement plan covering the entire process of advertising operations by financial investment companies, including ad creation, review, and post-management. First, CCOs will be required to participate in the decision-making process for reviewing financial investment company advertisements. This is a measure to prevent harm to financial consumers caused by false or exaggerated ads.
A procedure will also be added to pre-review whether information corresponding to investment advertising exists within externally provided information such as market and industry condition analyses. This aims to eliminate the practice of including investment-ad-like information in market analysis materials.
Backdoor advertising, where economic benefits are provided to famous YouTubers without disclosing economic interests in their videos, will also be blocked. Financial investment companies must prepare checklists for key stages such as YouTube channel operator contracts, ad reviews, and post-management, and conduct pre-reviews accordingly.
An Advertising Committee involving industry representatives, consumer groups, and media outlets will be established within the Korea Financial Investment Association to further strengthen ad reviews. The committee will function as a dedicated body responsible for overseeing advertising-related policies while reflecting external opinions from consumers and others.
Additionally, ads previously excluded from review criteria—such as those for newly listed ETFs, videos promoting high-risk financial investment products, and products designated by the Advertising Committee within company-owned channels like YouTube—will now be subject to review.
Criteria for determining sanctions against advertising violations will also be established. New standards for imposing fines related to ad violations are being introduced, with detailed judgment factors such as intent and consequences of the violation to be specifically defined.
Regular post-monitoring will be conducted even after ads are published. The association will check at least once a year whether published ads sufficiently reflect pre-review content. This follows frequent cases where corrections requested by the association were not implemented or unreviewed content was broadcast during online live streams. A false and exaggerated advertising reporting center within the association will also be activated.
On this day, Seo Jae-wan, Deputy Director of the Financial Supervisory Service, stated that those responsible for false and exaggerated advertisements that hinder investors' rational decision-making would face strict accountability. Deputy Director Seo said, "In particular, since most ETF investors rely solely on ad content without conducting their own research, false or exaggerated advertising by asset management companies can amount to incomplete sales." He added, "Financial investment advertising is a highly regulated subject under the Financial Consumer Protection Act."
He further emphasized, "The Financial Supervisory Service will never overlook false or exaggerated advertisements that hinder or mislead investors' rational decision-making and will hold both companies and relevant employees strictly accountable."
The improvement plan is scheduled to be finalized by mid-next month after completing pre-notification and opinion solicitation procedures for revisions to the Korea Financial Investment Association's regulations and other rules early this month, with implementation expected in January next year.
in STOCK
