[Asia Economy Reporter Park Jihwan] The Financial Supervisory Service (FSS) has revoked the registration of a total of 494 unqualified quasi-investment advisory firms.
On the 19th, the FSS announced that, based on a fact-check with related agencies such as the National Tax Service targeting 2,109 quasi-investment advisory firms as of the end of October last year, it has revoked the registration of 494 firms.
This inspection provided an opportunity to submit opinions through prior notification and public delivery to those confirmed to have grounds for revocation. As a result, the registration of a total of 494 unqualified firms that had no intention to resume business after closure or failed to complete compliance mandatory education was revoked.
Quasi-investment advisory firms refer to entities that provide investment advice on financial investment products such as stocks to an unspecified large number of people. Operated under a notification system, there are virtually no entry requirements, and individual business operators under tax law can also operate, so the number of quasi-investment advisory firms has been continuously increasing. The number rose from 1,596 in 2017 to 2,032 in 2018, 1,826 in 2019, and 2,250 as of March last year.
The financial authorities have been implementing the revocation system since July 2019 to prevent investor damage caused by unqualified firms' unsound business practices. The FSS has revoked the registration of a total of 692 firms over the past two years.
Firms whose registration has been revoked are prohibited from operating as quasi-investment advisory firms for the next five years. If they continue unregistered operations after revocation, they face criminal penalties such as imprisonment for up to one year or fines up to 30 million KRW.
The FSS plans to focus on creating a sound business environment by promptly removing unqualified quasi-investment advisory firms through annual regular inspections and blocking the entry of unqualified firms.
An FSS official said, "Recently, complaints such as non-refund of membership fees and excessive penalty charges have frequently occurred related to the use of online investment information services such as stock leading chat rooms," and urged, "Before signing a contract, be sure to check whether the firm is registered with the FSS, the appropriateness of usage fees and periods, and whether a contract document is provided before using the service."
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