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FSS Tightens Regulations on High-Risk Funds to Enhance Investor Protection
Finance · Investment Managers · yonhap_finance · 2026-09-09
The Financial Supervisory Service is mandating stricter internal controls and disclosure requirements for high-risk funds following losses in overseas real estate.
What Happened
Regulatory Oversight: The Financial Supervisory Service (FSS) has ordered asset managers to strengthen investor protections following a series of defaults in high-risk products, such as overseas real estate funds. The move comes amid heightened market volatility and geopolitical risks that have dampened investor sentiment.
Strengthened Accountability: To address deficiencies in local due diligence reports, the FSS now requires asset managers to conduct independent internal reviews. These reviews must include opinions from internal control departments and signatures from CEOs and compliance officers to ensure accountability.
Systemic Improvements: Starting September 30, new disclosure requirements will apply to 10 types of high-risk funds, including overseas real estate and REITs. These changes mandate clear documentation of key investment risks and historical loss data to help investors make informed decisions.
Future Monitoring: The FSS plans to utilize a special review team to monitor the structure of high-risk products and ensure compliance with new risk disclosure standards. Industry participants have pledged to improve risk management processes to restore consumer confidence.