(Korea) DLF measures to stop high risk fund sales from next month

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Derivatively-funded funds that have suffered massive losses have been implemented as early as next month to prevent the recurrence of the DLF crisis.

Intensive measures are being considered, such as separating banks from bank deposits to prevent employees from selling funds.

Reporter Kim Tae-min.

[reporter]
Derivatively-funded DLF crisis caused massive principal losses along with incomplete sales controversy.

Some of the high-strength measures proposed by the financial authorities will be implemented in earnest starting next month.

The Financial Services Commission and the Financial Supervisory Service will reflect industry opinions for the next two weeks, and will take immediate action from complementary measures that do not require revision.

In particular, administrative guidance on the banks that triggered the incident is greatly strengthened.

The financial investment product recall system and meditation system introduced by Woori Bank and KEB Hana Bank will be encouraged to spread to other banks, and the bank’s key performance indicators KPIs will reflect customer returns to proactively protect investors.

In particular, it is considered to set aside a general counter and a fund sales counter to prevent indiscriminate sales recommendations from customers with large deposits.

In fact, 62% and 31 trillion won of derivative-sold funds sold in banks were traded through general counters, most of which were high-risk products with a 20% chance of loss of principal.

[Kang Hyung-gu / Director General of the Consumers’ Union of Financial Consumer Affairs: The measures on the supplier side are also important, but when investing in products on the financial consumer side, self-intentions are clearly reflected, and in case of damage caused by incomplete sales, it must be supported by measures such as full compensation.]

As a result, banks are expected to release derivatives and lower their risks one after another.

However, it is pointed out that there is an urgent need for clear sanctions in the face of unavoidable deterioration of banks’ profitability.

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