Korea Investment & Securities has reportedly compensated investors in the "Belgian real estate fund" approximately 50.2% of their losses. Initially, the firm offered limited voluntary compensation to some investors, but it has since expanded the scope to include all investors. This decision is said to reflect a significant commitment to consumer protection by President Kim Seong-hwan.
According to the Financial Supervisory Service and the financial investment industry on May 14, Korea Investment & Securities has compensated investors in the "Korea Investment Belgian Core Office Real Estate Investment Trust No. 2" (Belgian fund) at an average rate of 50.2% of their losses.
The "Belgian fund" was established in 2019 by Korea Investment Real Asset Management and was structured to invest in lease rights for local office buildings leased long-term by Belgian government agencies. However, it faced controversy over improper sales, leading to numerous investor complaints. Initially, the fund was marketed with an emphasis on stable rental income over five years, but a surge in global interest rates and a downturn in the European commercial real estate market led to failed asset sales and ultimately resulted in total investment losses.
The total loss from this fund amounts to approximately 90 billion won, with Korea Investment & Securities accounting for about 58.9 billion won of that. Following the complete loss of the fund, the firm initially conducted voluntary compensation for only 458 out of 1,897 sales, which represented 24.1% of total sales, amounting to about 6.07 billion won. The remaining 1,439 cases were excluded from compensation.
After discussions with investors, Korea Investment & Securities changed its policy to provide blanket compensation for all investors. The compensation rate was reportedly adjusted based on individual sales processes and investment preferences, ranging from 40% to 80%. The total compensation amount is approximately 29.5 billion won, which is about half of the sales amount for the fund. This represents a fivefold increase compared to the initial voluntary compensation decision.
The significant expansion of the compensation scope by Korea Investment & Securities reflects a proactive response to the financial authorities' emphasis on enhancing consumer protection. Since the appointment of Lee Chan-jin as the head of the Financial Supervisory Service, there have been repeated calls to strengthen consumer protection for high-risk overseas alternative investment products. Lee publicly stated early in his tenure that if violations of internal controls related to improper sales are confirmed, the compensation standards for all disputes, including those already processed, could be readjusted. Additionally, the Financial Supervisory Service plans to mandate the submission of due diligence reports related to overseas real estate funds and establish standard guidelines for investment risks to significantly enhance investor protection.
In line with this direction, Korea Investment & Securities has established a consumer protection task force directly under the president's office, strengthening its consumer protection system throughout the entire process from product development to sales and post-management. An industry official commented, "This is a measure taken in response to the need to restore investor trust and enhance financial consumer protection, especially as large securities firms are achieving record performances recently."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.