South Korea's Financial Supervisory Service has set out stronger preventive investor protection as its oversight direction for the financial investment sector this year. It will establish an intensive review system for high-risk products and inspect the state of internal controls across the entire process from product planning to sales.

The FSS explained the plans at a "2026 financial investment sector financial supervision briefing" held at its headquarters in Seoul's Yeouido on Monday, attended by about 290 employees of financial investment firms and related institutions, including securities firms, asset managers and real estate trust companies.

Seo Jae-wan (서재완), deputy director-general for the financial investment sector, said at the briefing, "This year, we will make it a major shift in the financial supervision paradigm for preventive investor protection and seek to improve the industry's fundamentals."

The FSS plans to encourage financial companies to assess the risks of financial investment products from an investor perspective and communicate them. To that end, it plans to build an intensive review system targeting high-risk products.

It will also strengthen inspections to reduce mis-selling. The FSS plans to closely examine the state of internal controls at each stage, including product planning, manufacturing and sales.

On-site inspections will also be carried out. The FSS plans to respond through rapid, mobile inspections to illegal or unfair practices, or internal control deficiencies, that occur at customer-facing sites such as key branch stores. It will also expand "consulting inspections" that support financial companies in strengthening their investor protection systems on their own.

Oversight related to fundraising and real estate finance was also presented as a key task. The FSS plans to check whether risk management systems function effectively as comprehensive financial investment business operators increase fundraising through short-term notes and investment management accounts (IMA). It also decided to inspect the situation regarding delays in implementing reductions in real estate project financing (PF) in the financial investment sector.

The FSS also plans to support the early settlement of new systems such as business development companies (BDC) and the National Growth Fund, and to actively back the launch of new types of market infrastructure such as fractional investment and unlisted shares.

Seo also said, referring to recent Middle East developments, "Market volatility and uncertainty are growing due to domestic and external variables, and the industry needs preemptive risk management and stronger investor protection."

[Yonhap News Agency]