As competition intensifies to advertise financial investment products such as exchange-traded funds (ETFs), South Korea's Financial Supervisory Service will overhaul the entire process from ad production and review to post-management to reduce false and exaggerated advertising. YouTube ads for newly listed ETFs and high-risk financial investment products on firms' own channels are also expected to be included in the Korea Financial Investment Association's review scope.

The FSS and the association held a briefing on Monday on a comprehensive plan to improve advertising work by financial investment firms and disclosed key improvements and the implementation schedule.

The plan was prepared by running a joint task force with the industry from April to August. It also reflected discussions and advisory opinions from the fourth meeting of the Financial Consumer Protection Advisory Committee on Aug. 27.

A key part of the plan is to have financial investment firms review in advance whether information provided to outside parties constitutes investment advertising.

As there have been cases in which market or industry analysis materials include promotional content that can induce trading of specific stocks, the authorities decided to set up a prior review procedure for externally provided information.

A consumer protection officer (CCO) will also take part in the advertising review process. The measure is intended to check the possibility of consumer harm from false and exaggerated ads before they are run.

Oversight of advertising that uses operators of online channels such as YouTubers will also be strengthened. The authorities will create checklists for each key stage from contracts and reviews to post-management and clarify firms' obligation to conduct prior reviews. The aim is to prevent so-called "backdoor advertising" that does not disclose an economic relationship with an advertiser.

The association's advertising review system will also be reorganised.

The association plans to set up a new "advertising committee" involving the industry, consumer groups and the media to decide key policies related to advertising reviews.

The association will add to its review scope videos posted on firms' own YouTube channels that cover newly listed ETFs, high-risk financial investment products and products designated by the advertising committee. Until now, video ads on firms' own channels were excluded from the association's review, prompting criticism that review standards differed by company.

Sanction standards for advertising violations will also be made more specific. The authorities will create new criteria for imposing penalties related to advertising and clearly define detailed factors for assessment, such as the motive and outcome of violations.

Post-management after ads are posted will also be strengthened. Financial investment firms must immediately check whether posted ads properly reflect pre-review content and conduct regular follow-up inspections at least once a year.

The plan also aims to improve accessibility to the association's reporting centre for false and exaggerated advertising and to set up detailed internal operating procedures for receiving and handling reports.

The FSS and the association plan to give advance notice of draft revisions to relevant rules in early September and complete the revisions by mid-October after collecting opinions. They then plan to implement them in January 2027 after a period for financial investment firms and the association to reflect the changes in internal rules and revise work procedures.

Seo Jae-wan (서재완), senior deputy governor of the FSS, said the perception that advertising, which is an important regulated area under the Financial Consumer Protection Act, is merely a tool to recruit investors must be corrected. He said the watchdog would strictly hold the company and its executives and employees responsible for false and exaggerated advertising that undermines rational investment judgment.