The Financial Supervisory Service (FSS) is taking steps to improve regulations after reports of investors unknowingly paying fees for stock information services they subscribed to years ago. Moving forward, securities firms will be required to clearly separate the fees for stock information services from standard trading commissions, and automatic conversion to paid services after free trials without customer consent will be prohibited.
According to the FSS on November 11, the agency has developed a plan titled 'Improvement Measures for Stock Information Service Operations' after discussions with the Korea Financial Investment Association and the securities industry.
This initiative was prompted by complaints from investors who continued to incur fees for stock information services they had subscribed to a decade ago, often without any notification from the securities firms. These investors claimed they had forgotten about their subscriptions due to a lack of clear communication.
An inspection by the FSS revealed that many firms failed to properly inform customers about ongoing fees after subscription or switched them to paid services without explicit consent after free trials.
Currently, there are 12 securities firms offering paid stock information services, with approximately 103,000 users as of the end of last year, representing 0.23% of all customers. These firms generated 67.1 billion won in commission revenue from these services last year, and the FSS estimates that this year's revenue could reach around 150 billion won on an annualized basis.
Stock information services typically provide stock recommendations and analysis using artificial intelligence (AI) or collaborate with external advisory firms to deliver investment information. Fees are charged as a percentage of the transaction amount, typically ranging from 0.05% to 0.25%, in addition to the standard trading commission. Some firms also charge a flat monthly fee of around 10,000 won.
The issue arises because the percentage-based service fees are included in the trading commissions, making it difficult for investors to recognize additional costs. For instance, an investor trading 10 million won worth of stocks would pay a commission of 15,000 won at a standard rate of 0.015%. However, if they are also subscribed to a stock information service with a 0.1% fee, their total cost would increase to 100,000 won, nearly seven times higher. For a monthly trading volume of 50 million won, the commission burden would rise from 75,000 won to 500,000 won. In response, the FSS plans to significantly enhance the procedures for informing investors before and after they subscribe to these services.
The approach to free trial events will also change. Previously, some firms automatically converted customers to paid memberships without notifying them at the end of the trial period. In the future, firms must confirm customers' intentions to switch to paid services before the trial ends, and services must be terminated for those who do not explicitly agree.
Before subscribing, customers will be informed of the total fee burden associated with the service compared to standard trading commissions in specific monetary terms. After subscribing, firms must regularly notify customers about their service usage and fee rates through text messages or mobile app alerts.
The stock trading commission inquiry screen will indicate that the stock information service fees are included, and upon request, firms will provide a breakdown of the standard trading commission and service fees. Additionally, current users will receive notifications via text or alerts about their subscription status and a URL for cancellation.
The FSS plans to work with the Korea Financial Investment Association to finalize detailed implementation measures by the first quarter of 2027 and will monitor compliance by individual securities firms.
An FSS official stated, "We will ensure that investors clearly understand the service fees and can make informed decisions about their usage. We will continue to identify unreasonable business practices by securities firms and instances of unnecessary cost burdens on investors."
* This article has been translated by AI.
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