South Korea's Financial Supervisory Service and the Korea Financial Investment Association on Wednesday launched a task force to improve the advertising system for financial investment firms and held its first meeting, they said. They moved to overhaul the system after heated advertising competition in the sector led to cases that could undermine investor protection, including false or exaggerated ads and omissions of mandatory disclosures.

Financial authorities have flagged cases in which required guidance in financial investment firm ads was missing, including the standards for charging fees, the advertising entity and investment risks. They also cited false or exaggerated expressions and wording that could be mistaken as guaranteeing profits or covering losses.

They said the need to supplement the existing ad review system and association rules has grown as new marketing methods spread, including social media, YouTube videos and promotional press releases.

At Wednesday's meeting, the task force discussed the operating status of the current ad review system, problems and areas needing improvement. It plans to review expanding the scope of the association's pre-screening, improving review procedures and strengthening internal controls related to firms' own ad reviews.

The Financial Supervisory Service and the Korea Financial Investment Association also plan to strengthen inspections of industry advertising practices alongside the system overhaul. They plan to gather views from the industry and financial consumers and draw up final improvement measures in the third quarter.

Seo Jae-wan (서재완), an assistant governor at the Financial Supervisory Service, said advertisements by financial investment firms should provide accurate information to help investors make rational investment decisions. He pointed to recent cases of ads that could be false or exaggerated and said they could undermine trust in South Korea's capital market.

He added that the industry should actively participate in the task force activities to protect investors and restore trust in the capital market.