FSS: "Strengthening investor guidance to allow choices other than automatically designating high-commission managed accounts."
The Financial Supervisory Service (FSS) announced on the 14th that it is pushing to reform brokerage practices where securities firms charge higher trading commissions for accounts opened at physical branches compared to online platforms.

This initiative stems from continuous consumer complaints that securities firms charged higher fees for branch-opened accounts without adequate prior notice. The improvement plan reflects discussions and recommendations from the 4th Financial Consumer Protection Advisory Committee held last August.

Following an inspection of the current status of brokerage and pension savings fund trading commission rates, the FSS found that 10 major securities firms were charging significantly higher commissions on branch-opened accounts compared to online-opened accounts.

It was revealed that securities firms automatically designated branch-opened accounts as "managed accounts," adding costs for advisory and asset management services, which resulted in substantially higher trading commissions.

In fact, at one securities firm, even though the trading method was identical (conducted online) after being designated as a managed account, it was burdened with trading commissions over 10 times higher than an account originally opened online.

The FSS pointed out that securities firms lacked proper disclosure and guidance regarding commission discrepancies and the specific services provided under managed account designations when investors opened accounts at branches.

In response, the FSS decided to establish procedures ensuring that when fee differences exist based on managed account designation, investors are clearly guided and provided with a comparison of fees and available services during the account opening stage.

Furthermore, when investors open accounts at a physical branch, they will now be given the option to choose whether or not to designate their account as a managed account. Investor freedom of choice will be further guaranteed through SMS notifications and trading system pop-ups encouraging the opening of non-managed accounts.

The FSS stated, "This measure will expand investors' options in choosing account types and lower unnecessary trading commission burdens."

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