"Why Did My Fund Redemption Fee Increase?" What to Check Before Investing

Financial Supervisory Service Issues Consumer Precautions
Based on Major Dispute Cases

#1. Mr. A, who subscribed to a fund requiring fixed monthly payments, filed a complaint after five years when he terminated the fund, claiming that the redemption fee was unfairly higher than he had previously understood. In response, the Financial Supervisory Service explained that, since the fund calculates the redemption fee rate based on each monthly payment rather than the initial subscription date, it is difficult to consider this a problem.

#2. Mr. B filed a complaint stating that the financial company should compensate for his losses because he was unable to sell certain overseas stocks due to a delay in the stock split process. However, the Financial Supervisory Service responded that the delay was disclosed in the foreign securities transaction prospectus, and that advance notification was provided before the stock split, so the company's handling of the matter was not improper.

On December 23, the Financial Supervisory Service stated that as investors become more active in financial product investments, a diverse range of complaints continues to be raised. The agency released six "Key Consumer Precautions Based on Major Dispute Cases." The purpose is to prevent future consumer damage by identifying dispute complaints that may cause misunderstandings for financial consumers and providing relevant guidance.

First, the Financial Supervisory Service advised investors to check the method of fee imposition before subscribing to a fund, as the redemption fee rate may vary depending on the deposit period of the principal for each fund.

The case of Mr. A is a representative example. For this fund, the collective investment agreement and prospectus specified that the redemption fee would be calculated as follows: 1% for amounts with a deposit period of five years or more from the payment date to the redemption payment date, 3% for amounts with a deposit period between three and five years, and 5% for amounts with a deposit period of less than three years, with the total redemption fee being the sum of these amounts. The Financial Supervisory Service emphasized, "When calculating the deposit period for the principal, the starting point can be the actual payment (deposit) date for each amount."

Additionally, for exchange-traded funds (ETFs) that track indices via swaps, higher costs may be incurred compared to physically replicated ETFs, so investors should verify this before investing. Furthermore, when consecutively selling and buying different types of financial products, unsettled balances may arise due to differences in settlement dates for each product. In the case of overseas stocks, delays in reflecting changes during stock splits may restrict trading of the affected stocks for a certain period.

Subscription rights will lose their validity and effect if not exercised within the subscription period, so it is essential to check the subscription deadline. Previously, Mr. C, who purchased subscription rights certificates to participate in a paid-in capital increase, requested compensation for the purchase amount, claiming that the financial company failed to actively notify him of the subscription deadline, resulting in the expiration of his rights. However, the financial authorities responded that the prospectus clearly stated that rights and validity would be lost if not exercised within the subscription period, and that relevant notifications had also been sent via text message, so the company's handling was not improper.

It is also important to note that even if subscription rights are exercised within the subscription period, the subscription may be canceled if the payment is insufficient. The Financial Supervisory Service cautioned, "Subscription rights only grant the right to acquire new shares through additional payment, not the right to exchange for new shares," adding, "If the subscription payment is insufficient by the deadline, the subscription will be canceled and the subscription rights will expire."