Board of Audit launches probe into financial authorities' investor protection practices

The Board of Audit and Inspection (BAI) has launched an audit into financial authorities, including the Financial Services Commission and the Financial Supervisory Service, to assess their investor protection measures. The BAI plans to focus on the efforts of financial authorities to protect investors, recognizing that ordinary financial investors may bear excessive transaction costs or see low returns on their retirement funds due to information asymmetry and a lack of specialized knowledge, it announced on the 25th.

The audit team, comprising nine auditors from the Industrial and Financial Audit Bureau, will spend the next 20 days inspecting the appropriateness of the financial authorities' preventive and follow-up measures for investor protection, financial companies' policies to prevent mis-selling, and the establishment of protection mechanisms for vulnerable groups. The audit will also cover the effectiveness of the Financial Supervisory Service's detection of and sanctions against financial company misconduct, as well as the operational status of the dispute resolution system when financial investor damages occur.

This review will examine the challenges ordinary financial investors may face and the authorities' response measures, with a focus on the efforts of financial authorities to protect investors. It will specifically scrutinize the appropriateness of the cost and profit calculation systems investors pay for stock trading, as well as securities firms' credit loan interest rate calculations and disclosures, and the transparency of transaction fees. Furthermore, it will review whether the government's regulations on retirement pension investment in risky assets limit opportunities for return enhancement, and examine the necessity of applying best execution standards for domestic stock trading by pension funds and mutual aid associations.