South Korea to introduce new fund sales rules

SEOUL (Reuters) - South Korea will allow mutual savings firms and online-based companies to sell investment funds from next February, and draw up measures to cut sales fees for long-term investors, a regulator said on Sunday.

The Financial Services Commission FSC.L said in a statement that it will also tighten investor protection rules for fund sellers to teach customers risks from an investment, as well as its commissions and fees.

"South Korea's fund sales market has been in the oligopolistic structure, which lacked competition for services and commissions between sellers," the statement said.

Currently, only banks, securities houses and insurance companies are authorised to sell investment funds which accounted for nearly 10 percent of the country's household financial assets in 2007.

The top four domestic banks, led by Kookmin Bank 060000.KS, and brokerage Mirae Asset Securities (037620.KS) command almost half of the sales, which are valued at 310 trillion won.

The upcoming measures are in line with the Capital Markets Integration Act, which is aimed at triggering a "Big Bang" among financial services companies by breaking down walls between securities houses, futures trading and asset managers.

The government agency will also require the country's asset management association to disclose and compare commissions and fees of each fund from next month, while it works out a new sales fee system to benefit long-term investors.

Meanwhile, FSC will consider allowing individuals to offer investment advisory service to fuel competition in the advisory market and cut fees.