The Financial Services Commission (FSC) of South Korea has unveiled plans to restructure the country’s financial advisory sector, under which Independent Financial Advisers (IFAs) will be allowed to provide independent advice, free from product providers.
As part of the new plan, IFAs can receive service charges only from their client, and not from product providers.
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However, non-IFA advisers will be allowed to take commissions from product providers alongside advisory fees from their clients, provided they disclose such payments to their clients.
Further, in order to reduce entry hurdles for financial advisors, the regulator has proposed a legislation to lower capital requirements for such firms from the existing KRW500m to KRW100m.
In addition, the regulator has proposed a rule to allow robot advisory services offer direct front-office services to customers. Under the countrys’ existing law, robo-advisers are restricted from offering fully automated advice without the assistance of human asset managers.
A pilot test of fully-automated robot advisory services will be done in July 2016.
