In a statement released last week, the FSC announced that it is currently working on changes in regulation, due to come into force in May, which mean that employees in financial services companies, such as asset managers, analysts and advisers, will be able to set up investment advisory firms completely independent from their employers.
The body is also looking to lower capital requirements for such firms by a whopping 80% down to KRW100m ($85,500) from KRW500m ($428,675) previously – in a bid to expand the nation’s tightly-regulated financial advisory industry.
Furthermore, the FSC confirmed that IFAs in South Korea will adopt a fee-only model where service charges are paid for by the client with strict prohibitions on receiving commissions from product providers.
Although, non-IFA advisers can still recieve commissions from product providers in addition to advisory fees from their clients, they must disclose such payments to their clients first.
Best practice guidlines
The regulator also revealed that it will set out best practice guidelines for financial advisers by the first half of this year, in order to provide detailed rules on fiduciary duty.
Robo-advice
The FSC is also looking to introduce legislation allowing robot advisory services to provide direct advice to customers.
Under current regulations, robo-advisers as they are known are not allowed to provide fully automated advice without the help of human asset managers.
However, the authority has said that it will launch its first pilot scheme in July which will test run fully automated robo-advisory services, with a view to rolling out the product nationally.
