Financial Supervisory Service inspects KB Financial Group and ETF fee practices

The Financial Supervisory Service (FSS) has launched a regular inspection of KB Financial Group and KB Kookmin Bank. The examination focuses on governance, internal controls, and consumer protection. Key areas of scrutiny include the transparency of CEO succession procedures, the effectiveness of internal controls regarding high-risk financial products, and the management of overseas subsidiaries, specifically following previous issues with KB Bank in Indonesia.

In a related move to strengthen consumer protection, FSS Governor Lee Chan-jin emphasized the obligation of financial institutions to clearly explain fee structures to investors. This follows an investigation into the sale of Exchange Traded Fund (ETF) trusts by major banks, where approximately 64 trillion won was sold between January and May. The FSS is examining whether banks sufficiently disclosed the differences between upfront and deferred fees, as these costs significantly impact consumer returns depending on transaction duration.

The regulator intends to work with the banking sector to reform ETF trust fee structures and ensure that consumers are adequately informed about changes to deposit and loan products to prevent financial harm.