FSS Orders Banks to Report Fund Sales Status and Earnings Monthly

[Asia Economy Reporter Kim Hyo-jin] From now on, banks will be required to report their fund sales status and sales profits to the Financial Supervisory Service (FSS) on a monthly basis.

This move is interpreted as a result of public opinion forming that banks pursuing stability need stricter internal control standards, following cases such as overseas interest rate-linked derivative-linked funds (DLF) and Lime incidents, where banks sold high-risk products leading to massive principal losses.

According to financial authorities on the 19th, the FSS plans to regularly receive reports related to fund sales by revising the detailed rules for bank supervision. Banks must report the fund sales status, sales status by beneficiary, and sales profit status monthly, and the number of fund accounts quarterly.

Regarding fund products sold by banks, the financial authorities view that investors and consumers tend to expect principal protection more strongly than with other financial companies such as securities firms, thus stricter control standards are necessary.

The FSS is also working with the banking sector to draft the "Model Code of Internal Control for Non-Deposit Product Sales" and is coordinating the detailed contents. The draft model code was created by the FSS providing guidelines and reflecting the banks' internally prepared instructions considering their sales situations.

The draft model code includes control measures for all processes such as product review, sales procedures, and performance management related to sales.

It is known to include measures such as improving key performance indicators (KPI) to prevent bank employees from aggressively selling specific funds, and partially restricting sales branches, employees, or customers.

The FSS has been conducting discussions since early this year by forming a task force (TF) with the banking sector to prepare the model code. The work included selecting excellent and exemplary cases among internal control guidelines proactively implemented by banks and generalizing them for application across the entire banking sector.

An FSS official explained, "It can be seen as a kind of bank self-regulation," adding, "We considered ways to enable internal control to be carried out as efficiently as possible, taking into account the circumstances of frontline sales sites."

A representative from a commercial bank participating in the discussions said, "A significant portion of the contents to be included in the model code are already established and operated independently by several banks, so there should be no major difficulties in implementation."

The FSS is coordinating opinions with the Financial Services Commission based on the draft model code. An FSS official said, "It does not seem easy to complete it within this month," and added, "We plan to proceed with the process as quickly as possible."

This content was produced with the assistance of AI translation services.