Seoul: The financial watchdog said Wednesday it will strengthen measures to prevent improper sales of high-risk financial products following a series of fiascos. The Financial Supervisory Service (FSS) said banks will be advised to sell such products to customers only at designated outlets via licensed staff.
According to Yonhap News Agency, the banks will also be asked to enhance their internal control system to prevent the recurrence of improper sales of financial products. The watchdog said such measures will be implemented following revisions of related laws and guidelines this year.
The measures come as bank and stock brokerage customers have suffered massive losses from investments in equity-linked securities (ELS) products tracking Hong Kong's H Index. According to the watchdog, customers at five banks suffered 4.6 trillion won (US$3.22 billion) in losses from their combined 10.4 trillion-won investment in the Hong Kong H index-linked financial products in early 2024 as the index plunged.
ELS refers to hybrid securities whose returns are linked to the performance of underlying equities, including a stock index. Since the fiasco, local banks have been ordered by the watchdog to compensate part of the losses as their ELS products were found to have been improperly sold.