The Financial Supervisory Service (FSS) has urged a reevaluation of the performance compensation system for the newly launched Comprehensive Investment Management Account (IMA) products to ensure responsible actions are taken in case of incomplete sales, such as reclaiming bonuses. The financial authorities plan to introduce measures like clawback to retrieve existing bonuses from employees in the event of financial incidents. This initiative is expected to extend to IMA product sales, allowing for the retrieval of bonuses if issues occur.
On November 20th, the FSS held a meeting at its headquarters in Yeouido, Seoul, with top executives from Korea Investment & Securities, Mirae Asset Securities, and Kiwoom Securities, emphasizing the need to protect investors. The IMA, available to comprehensive financial investment business operators with self-owned capital exceeding 8 trillion won, seeks profits by investing client deposits in corporate finance assets while assuming a capital guarantee obligation.
Investors can aim for excess returns without the fear of loss, making it a major industry topic as securities companies can raise large-scale customer deposits for investment in company bonds or loans. The FSS plans to work with the industry to operate a task force to identify potential issues from the product design and manufacturing stages of the IMA.
Additionally, the FSS stressed that offering documentation like investment prospectuses and reports should align with investor perspectives. Companies are encouraged to establish a comprehensive sales process by controlling potential incomplete sales factors throughout the design, sale, and post-management stages.
In relation to expanding the supply of venture capital by comprehensive financial investment companies, the FSS requested they perform their essential roles in “substantial venture capital supply” rather than just meeting the obligatory ratios. IMA businesses are required to allocate 25% of their notes issuance and IMA financing to the venture capital sector, including startups, by 2028.
Furthermore, the FSS stated that strengthening a sound management system is vital for the continual supply of venture capital. Highlighting the risks seen in the real estate project financing crisis in the second half of 2022, the FSS noted the potential for certain asset group concentrations to escalate liquidity risks across the entire securities industry. Consequently, they emphasized the importance of proactive risk management to prevent IMA and notes issuance from becoming instability factors in the capital market.