The Financial Supervisory Service (FSS) has decided to overhaul how brokerages disclose fees for paid stock information services. The reasoning is that investors may not even know they are paying usage fees. On the 11th, the FSS released the results of its inspection of how brokerages operate such services.
The inspection found 12 brokerages that charge for stock information such as stock picks and supply-demand analysis. They have 103,000 users, about 0.23% of all customers. The fee revenue these brokerages earned from the services last year came to 67.1 billion won.
The information is provided by brokerages' own artificial intelligence (AI) or by outside firms contracted with the brokerages. Investors choose and sign up for the channel they want among multiple information channels. Fees were charged at a rate of 0.05% to 0.25% per service, or as a flat amount depending on the number of services used.
The FSS judged the disclosure to be insufficient, because fee notices were limited to before and immediately after sign-up. Moreover, the fee is levied in the form of a fee rate in place of the basic brokerage commission. As a result, some investors may not realize they are paying a service fee.
Going forward, brokerages must disclose fees in three ways: before sign-up, periodically after sign-up and on an ad hoc basis after sign-up. Before sign-up, they must show a specific comparison of the total fee difference before and after enrolling. After sign-up, they must regularly notify users by text message and other means of their usage and the applicable fee rate. The trading fee check screens of mobile trading systems (MTS) and home trading systems (HTS) must also include the service fee structure.
The practice of free-trial events will change as well. Some brokerages automatically converted customers to paid members after an event ended without notifying them separately. The FSS plans to allow conversion to paid status only for investors who have explicitly consented.
An FSS official said, "With this improvement, investors will be able to clearly know the service fees and reduce unnecessary cost burdens." The FSS aims to complete the improvements in the first quarter of next year, drawing up detailed implementation plans with the industry and checking brokerages' compliance.